In India, prenuptial agreements are not legally valid yet. Because of this, many wealthy people are now looking for new ways to protect their property in case their marriage ends. One such method is creating a private family discretionary trust. This method is now being used more often.
According to the Economic Times, a textile exporter from Delhi shared that his son’s marriage ended very quickly. He said, “By setting up the trust before the marriage, we had already secured my son’s business and our family home.”
In a similar case, a well-known jeweler from Mumbai transferred all his property into a trust and made his son the only beneficiary. When the son filed for divorce, his wife was not able to claim any rights over the properties, which she once believed belonged to her.
What Is the Meaning of This Trust?
Rajat Dutta, founder of Inheritance Needs Services, says that a trust is created to protect the interest of its beneficiaries through a trustee. He explained that even if a borrower is both the trustee and the beneficiary, and is unable to repay a bank loan, the bank cannot seize the property placed in the trust. This means the trust helps in protecting the property legally.
This Method Is Reaching the Middle Class Too
Earlier, only rich people used to create trusts to protect their wealth. But now, middle-class families are also using this method. They want to secure their earnings and avoid family disputes, especially during divorce cases.
Trusts Also Provide Security to Women
Trusts can also offer financial safety to women. A lawyer shared a case where a woman used to depend on her husband for money. But she was able to protect her own assets because they were kept in a trust. This trust was created by her father for her and her children.
Traditional and NRI Families Are Also Using Trusts
Legal experts say that traditional families who want to protect their businesses are now using this method. Even parents of NRIs, whose children have married into different cultures or countries, are creating trusts to secure family wealth.
How Is a Trust Created?
Ashwini Chopra, Head of Family Office Solutions at Avendus Wealth Management, says that many families are forming trusts to protect their sons from financial loss after marriage—especially in inter-caste or inter-religion marriages.
The trust is set up in a way that the son does not legally own any property. He is only a beneficiary of the trust. This limits the chances of a wife making any legal claim over the property during a divorce.
Focus Shifting from Inheritance to Divorce Protection
Experts say that earlier trusts were mainly created to manage inheritance. But now, many trust deeds are being made with divorce in mind. Some recent high-profile divorce cases have shown different outcomes because India does not have a clear law like a prenuptial agreement. This has led more people to use trusts as a form of protection.
