Hello Team,

We, as a family of 4, have accumulated sizeable amount (cash) that is supposed to be used for retirement purposes. The amount accumulated is through a sale of property (the tax for this transaction has been paid). Our goal is to form a private irrevocable specified trust, introduce the cash into trust while forming the trust and then deploy that cash into debt and equity investments. Following are our concerns:

1. Tax implication while introducing the cash into trust – It is very much clear that there won’t be any capital tax implication for introducing the cash into trust. BUT will there be any tax implication for the said transaction if the Settlor of the trust is one of the Beneficiaries?

2. Can there be a clause for the trustee that he/she could sell investments (debt/equity) on a regular basis and provide that to the beneficiaries on time to time basis to fund the beneficiaries retirement?

3. What would be the tax implication on the selling of equity/debt funds? Will the capital gain on the selling of equity be taxed as whole on the trust or the beneficiaries getting the fixed shares would be taxed in individual capacity? (like all of the 4 would pay capital gains tax on the proportionate amount that they receive from the trust?)