2. Trust for children's big-ticket needs
One requires considerable money at the right time in order to provide for higher education and marriage of a son or daughter.
For this purpose, it is necessary to have a plan to keep savings duly invested under a trust for the marriage or education of son or daughter. Without such a plan, you would probably end up eating into money earmarked for your retirement.
There can be a hundred per cent specific beneficiary trust and it can be created by the investor oneself, or through one's close friend or relative. Such a trust deed should provide for the accumulation of the trust's income during the minority of the child so that the money is available for the grown up child’s education, marriage, etc., as the case may when he is a major.
During the minority of the child, the income of the minor child under the trust would not be added with the income of the father or mother as per the principles laid down by the Supreme Court of India in the case of C.I.T. v M.R. Joshi [1995] 211 ITR 1 (SC).
Image: Ywaishhnnavi Waythamoorthy, 5, daughter of Indian rights activist P Waythamoorthy, releases a dove outside the Malaysian Prime Minister's Department office in Putrajaya, Kuala Lumpur | Photograph: STR/AFP/Getty Images
Also read: 7 star strategies for your child's future
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