Private Trust Secrets.. Wealth Protection Or Legal Risk !

The use of private trusts by wealthy families and major businesspersons to manage assets has once again become a topic of discussion in India. Instead of holding properties, shares, and wealth directly in their names, many prefer to place them under private trusts for easier asset management and succession planning. A trust generally includes a settlor, trustee, and beneficiaries, and once assets are transferred, the trust legally becomes the owner of those assets.

However, experts clarify that trusts are not complete protection shields against loans or financial crimes. If assets are transferred to trusts intentionally to avoid loan recovery or investigations, courts may treat it as a fraudulent transfer. Private trusts also do not offer major tax exemptions, unlike charitable public trusts. Agencies like the Enforcement Directorate and Income Tax Department can investigate and even seize trust assets if illegal financial activities are proven.