Irrevocable Trust Services in India | Savlana Init

Trust Services · Irrevocable Trust

Irrevocable Trust Services — Permanent Protection. Structured Legacy.

CA assistance for irrevocable trust setup in India — irrevocable trust deed drafting, asset protection structure, succession planning, trustee obligations, and income tax advisory under the Indian Trusts Act and Income Tax Act.

An Irrevocable Trust is a private trust in which the settlor permanently and irrevocably transfers specified assets to a trustee — giving up all rights to revoke, alter, or recover those assets once the trust is created. Because the settlor has divested themselves of the settled assets entirely, an irrevocable trust provides strong asset protection from the settlor's future creditors, avoids the Section 61 income tax charge (which applies only where a revocation power exists), and creates a permanent, legally binding succession structure for the assets.

Irrevocable trusts are used for long-term succession planning — ensuring that family assets pass to the next generation in the manner the settlor intends, managed by trusted trustees, without being subject to the probate process or the disputes that often arise on intestate succession. They are also used where the settlor's business or personal circumstances create creditor exposure risks and the settled assets need to be ring-fenced permanently. ESOP trusts, gratuity trusts, and superannuation trusts set up by employers for employees are all structured as irrevocable trusts.

The defining characteristic of an irrevocable trust is that the settlor cannot take back the assets or change the beneficiaries once the trust is created — making the drafting of the trust deed especially important. Every provision of the deed must reflect the settlor's intentions with precision, because future amendments are either impossible or require beneficiary and court approval. We assist with the complete irrevocable trust setup — advising on the structure, drafting the deed with detailed beneficiary entitlements and trustee powers, completing Sub-Registrar registration, obtaining PAN, and advising on the income tax treatment of the settled assets and trust income going forward.

Our Irrevocable Trust Services

Irrevocable Trust Deed Drafting

Precision drafting of the irrevocable trust deed — assets, beneficiaries, vesting conditions, trustee powers, and succession — with no revision pathway.

Asset Protection Structure

Structuring the trust to protect settled assets from the settlor's future creditors while complying with fraudulent transfer laws.

Beneficiary Entitlement Drafting

Precise drafting of beneficiary rights — fixed entitlements, discretionary distributions, vesting on age or events, and future beneficiary inclusion.

Trustee Powers & Succession

Drafting trustee investment authority, accounting obligations, distribution discretion, and trustee succession mechanism.

Sub-Registrar Registration

Registration of the irrevocable trust deed with the Sub-Registrar where immovable property is settled.

Section 61 Clearance & Tax Advisory

Advising on income tax treatment of the irrevocable trust — Section 61 does not apply, trust income taxed in trust or beneficiary hands.

ESOP / Gratuity Trust Setup

Setting up employer irrevocable trusts for ESOP schemes, approved gratuity funds, or superannuation schemes for employees.

PAN & Annual Compliance

PAN for the trust, annual income tax return (ITR-5), and compliance advisory for the trustees throughout the trust's operation.

Our Process

Objective & Asset Assessment

We assess the assets to be settled, the protection objective, beneficiary structure, and succession goals to design the optimal irrevocable trust.

Deed Drafting — Precision First

Every clause of the trust deed is drafted with the understanding that this document cannot be easily amended after execution.

Execution, Stamp Duty & Registration

The deed is executed on stamp paper of the appropriate value and registered with the Sub-Registrar where required.

PAN & Tax Advisory

PAN is obtained; the income tax treatment of the settled assets and future trust income is confirmed and documented.

Trustee Handover & Compliance Setup

The trust is handed over to the trustee with a compliance framework — annual ITR, accounting, and record-keeping obligations.

Why It Matters

✓Permanent asset protection — settled assets outside the settlor's estate

✓No Section 61 income tax charge — settlor not taxed on trust income

✓Structured succession that cannot be challenged or overridden after creation

✓Probate avoided for assets settled in the trust

✓Beneficiary entitlements precisely defined — no room for future dispute

✓Trustee succession mechanism prevents operational gaps

✓ESOP and gratuity trusts structured as approved irrevocable trusts

✓Sub-Registrar registration completed for immovable property trusts

Frequently Asked Questions

An irrevocable trust is a private trust where the settlor permanently transfers assets to a trustee and gives up all rights to revoke, recover, or alter the trust arrangement. It is used for asset protection from creditors, long-term succession planning, avoiding probate for settled assets, and eliminating the Section 61 income tax charge that applies to revocable trusts. Once created, the trust deed cannot be amended without beneficiary consent or court approval.

Once assets are settled in an irrevocable trust, they are no longer legally owned by the settlor — they belong to the trustee in their capacity as trustee for the beneficiaries. Future creditors of the settlor cannot access the settled assets because the settlor no longer has any legal or beneficial interest in them. However, the transfer must not be a fraudulent transfer (done to defeat existing creditors) — genuine irrevocable trusts created in good faith are protected.

Section 61 of the Income Tax Act (which taxes revocable transfer income in the settlor's hands) does not apply to an irrevocable trust. The trust's income is either taxed in the hands of the trustee as a representative assessee — at the maximum marginal rate for a discretionary trust — or in the hands of the beneficiaries at their individual rates if the trust is a specific trust (where each beneficiary's share is known and determinate).

An irrevocable trust can only be varied or revoked with the consent of all beneficiaries (if they are adults and absolutely entitled) or by a court order in limited circumstances. This is why the trust deed must be very precisely drafted before execution — there is no simple mechanism to correct a drafting error or change the trust terms after the fact. Professional legal and financial advice before execution is essential.

In a specific trust, each beneficiary's share of the trust income and corpus is fixed and known from the trust deed — for example, 'income to be distributed 50% to A and 50% to B'. In a discretionary trust, the trustee has the discretion to decide how much to distribute to each beneficiary in each year. Discretionary trusts are taxed at the maximum marginal rate; specific trusts are taxed at the beneficiaries' individual rates.

An ESOP (Employee Stock Ownership Plan) trust is an irrevocable trust set up by a company to hold shares for the benefit of employees under the company's ESOP scheme. The trust acquires shares from the company or market, holds them for the vesting period, and transfers them to employees on exercise of their options. The irrevocable structure ensures the shares are ring-fenced for the benefit of employees and cannot be recalled by the company.

Considering an irrevocable trust?

We advise on the structure, draft the deed with precision, complete the registration, and explain the income tax treatment — so your irrevocable trust protects the right assets for the right beneficiaries permanently.