Private Family Trusts and IPO: Everything You Need to Know

Private family trusts are a great way of investing, saving, and managing assets. These trusts have now become useful tools for various kinds of investments. Let’s learn more about private family trusts and how one can apply for an IPO through them.

What is Trust?

A trust is a group of three parties, say Party A, B, and C. Here, A is a settler who transfers a property (tangible or intangible) to a party B (trustee) for the benefit of party C (beneficiary).

So, the settlor creates the trust, which then includes the trustee and the beneficiary. The settler is the decision-maker of a trust. They can decide on all the profits earned by a trust and can either share it with members or keep it to themselves. Why does a trustee participate in a trust if they have no control? It is because a trustee controls a trust’s assets without owning them.

What are Private Family Trusts?

Private family trust are created by settlors for family succession and family wealth planning during their lifetime and even after that. Let’s understand this through an example.

Let’s say a mother creates trust for her children. Then, she decided that whatever profits would be earned through the trust would be distributed between two of her children equally for the next 15 years. After that, the same profits would be divided equally amongst her grandchildren. So, this way, she has secured her family’s future.

Private Family Trusts and Initial Public Offerings

Private Family Trusts can apply for an IPO in the Non-Institutional Investors category. NII or Non-Institutional Investors are the investor categories, including NRIs, HUFs, Resident Indian individuals, Corporate Bodies, Scientific Institutions, Societies, and Trusts who invest more than Rs. 2 lakhs in an IPO. NII has two subcategories i.e., sNII and bNII.

  • sNII stands for the small NII category, where investors can invest up to Rs. 10 lakh.
  • bNII stands for big NII where investors can invest more than Rs. 10 lakh.

A private family trust can invest in any of these sub-categories. All the profits go to the settlor of the trust, who can decide who would receive the profits.


Private family trusts are a successful way to save your family assets and divide them according to your wishes. On the other hand, IPOs are a great way of generating wealth through the stock market. Therefore, to save for your future family, you should create private family trusts and invest in IPOs.

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Happy trading!