New Delhi, Oct. 26 -- Wealthy families use private trusts to manage succession and keep assets together across generations. A family trust holds assets for relatives, with trustees managing them under agreed rules.

In India, these arrangements come under the Indian Trusts Act, 1882. A trust is not a separate company or an automatic shield against taxes.

The person trust is called the settlor. Its structure determines how much control the settlor retains and how beneficiaries receive wealth. Two choices involve revocable versus irrevocable trusts, and specific versus discretionary trusts.

A revocable trust allows the settlor to undo the arrangement. Its income is taxed as the settlor's income, offering no tax saving.

An irrevocable tru...