A family trust is worth its cost in three situations: a beneficiary who cannot manage money, a business that must pass intact, and a transfer that must stay out of a public court record. Everywhere else a will does the same job for far less. Settling a Rs 2 crore Mumbai flat into a private trust costs about Rs 10 lakh in stamp duty, paid at the Sub-Registrar when the deed is executed.

If someone has quoted you two per cent, that is the rate Maharashtra charges a religious or charitable trust. A private one pays the same stamp duty as a sale, and that number is usually what settles the decision rather than anything about trusts themselves.

Where this page sits

This page covers the decision, not the paperwork: when a trust is worth its cost, what Maharashtra charges to move property into one, when a will does the job instead, and the single structural choice that decides whether your bill is five figures or three.

If you have already decided and want the formation steps, go to creation of a family trust in India.

Related guides:

• What a private family trust is, and the types available
• Family trust or a will: which fits
• The full cost of creating a family trust

What Does It Cost to Move Property Into a Family Trust?

In Maharashtra, five per cent of the market value of the property, the same duty you would pay to sell it.

That figure comes from Article 61 of Schedule I of the Maharashtra Stamp Act, published by the Department of Registration and Stamps. Article 61 splits a declaration of trust by its purpose. Where the trust is made for a religious or charitable purpose, the duty is two per cent of the amount settled. "In any other case", which is every private one, Article 61 charges "the same duty as a conveyance under Article 25". Article 25 is five per cent of market value on immovable property and three per cent on movable property.

So the two per cent figure that circulates is real, and it belongs to somebody else. On a flat in Mumbai assessed at Rs 2 crore, the duty is roughly Rs 10 lakh. It falls due when the deed is executed and is paid at the Sub-Registrar office, which is where the Department of Registration and Stamps administers the schedule these rates come from.

This matters because most people meet the idea of a trust as a tax and succession idea, and meet the stamp duty afterwards, by which point a structure has usually been decided. It is the largest single number in the decision, so price it first and let the answer to that shape the deed.

Is There a Cheaper Way to Structure It?

Yes, and it is in the same article. Where the declaration of trust makes no disposition of property, Article 61 charges five hundred rupees. Revoking a trust is also five hundred rupees.

The gap between five hundred rupees and five per cent of a Mumbai flat is not a loophole. It is the difference between a trust that exists and a trust that has been filled, and it is a question of what you settle and when. A trust can be created now and funded in stages, or funded with assets that do not attract conveyance duty at five per cent, or left to be funded by your will rather than in your lifetime.

Which of those is right depends on what you own, who you are protecting and how soon. That is the point where this stops being a reading exercise. A deed drafted to postpone the duty and a deed drafted to trigger it look almost identical to a layperson.

When Does a Beneficiary Change the Answer?

When somebody in the family cannot hold money in their own name and manage it.

This is the situation where a trust is not competing with a will, because a will cannot do this at all. A will transfers assets and stops. It cannot supervise, stagger a release, or keep a share out of the hands of somebody who would spend it in a year. A trust holds the asset and a trustee applies it, for as long as the deed says.

For instance, a parent providing for an adult child with a lifelong disability needs money to be available every month for forty years, and needs it to survive their own death without a guardian having to ask a court. A will names an heir. A trust names a mechanism. Where that is your situation, the stamp duty is not the deciding factor, and we have covered the specifics in planning for a beneficiary with special needs.

When Does a Business Change the Answer?

When the value is in an operating company rather than in property, and the company has to keep operating.

A business split between four heirs under a will is four shareholders with different plans. Held in a family trust, the shareholding stays whole while the income is shared, and the succession does not require every heir to agree before the company can act. The stamp-duty arithmetic also changes: Article 25 charges three per cent on movable property, and shares are movable property, so settling shares is not the same event as settling a flat.

When Does Privacy Change the Answer?

When you would rather your estate did not become a public document.

A will that goes to probate becomes part of a court record, and in Mumbai, Kolkata and Chennai probate is compulsory for a will made by certain communities. A trust that is already funded does not pass through probate, because the assets are already held by the trustee. The estate moves without a filing and without a public reading of who got what.

This is a real benefit and it is regularly oversold. Privacy alone rarely justifies five per cent of a property's market value. It justifies a trust when it sits alongside one of the other two situations.

When Is a Will Enough?

Most of the time, and this is the answer nobody selling trusts gives you.

If your assets are straightforward, your heirs are adults who can manage money, and nobody is running a business that has to survive you, a will does the job. It costs a fraction of the duty, it can be changed as often as you like, and it does not require you to hand control of anything to a trustee while you are alive. The comparison is set out in full in family trust or a will.

A trust is not a better will. It is a different instrument that solves problems a will structurally cannot, and it charges you for the privilege at the moment you fund it.

What Should You Settle Before Anyone Drafts Anything?

Three things, in this order.

First, what you are actually protecting: a person who cannot manage money, a business that must not fragment, or a transfer that must stay private. If none of the three describes you, the answer is probably a will.

Second, what you would put in and when. This is the five hundred rupees versus five per cent question, and it is a drafting decision, not a form-filling one.

Third, which state's stamp duty applies. Stamp duty is a state subject and each state publishes its own schedule, so the two per cent confusion travels across state lines with the rest of the internet. The figures on this page are Maharashtra's, read from the state's own Schedule I. If your property sits elsewhere, ask for the article number in your state's schedule and check the rate against it before anyone drafts.

Bring those three answers to the drafting table and the rest is mechanical.

FAQs

When should you set up a family trust rather than write a will?

When a beneficiary cannot manage money themselves, when a business has to pass intact, or when the transfer has to avoid a public probate record. Outside those three, a will generally achieves the same result at a far lower cost.

Is stamp duty on a family trust really two per cent?

Not for a private family trust. Article 61 of Schedule I of the Maharashtra Stamp Act charges two per cent only where the trust is made for a religious or charitable purpose. "In any other case" it charges the same duty as a conveyance under Article 25, which is five per cent of market value on immovable property and three per cent on movable property.

What does a trust deed cost if no property is transferred into it?

Five hundred rupees in Maharashtra, under Article 61 where the declaration of trust makes no disposition of property. Revocation of a trust is also five hundred rupees.

Does a family trust avoid probate?

Assets already held by the trustee do not form part of the estate that goes to probate, so they pass without a court filing. Assets you never settled into the trust still pass under your will.

Do the same stamp duty rates apply outside Maharashtra?

No. Stamp duty is a state subject and every state publishes its own schedule with its own article numbers and rates. The figures here are read from Maharashtra's Schedule I and should not be assumed to hold anywhere else.

Can a family trust be set up now and funded later?

Yes, and the timing is what decides the duty. A declaration that makes no disposition of property at execution attracts five hundred rupees; the conveyance-rate duty falls due when property is actually settled.