A family with Rs 50 crore settles Rs 30 crore into a private trust for three beneficiaries, one with special needs. Set the distribution policy, the investment split between income and growth, and the annual running costs.

Pay out 3% of a three-year average value, Rs 90 lakh in year one, with the special-needs beneficiary's Rs 36 lakh paid first and the rest split between the other two. Hold about Rs 7 crore, six years of payouts and costs, in a debt ladder and invest the other Rs 23 crore 70/30 for growth. Running costs are about Rs 27.5 lakh, 0.92% a year. At 3% the trust shrinks slowly in real terms but still covers the care costs after 30 years.

The deed and the order of payment, not the word trust. A family that puts money in a locked box but leaves no instructions has only delayed the argument. The trust deedThe legal document that creates a trust and sets out who the trustees and beneficiaries are, what the trustees may do and how money is distributed. should make the care budget the first call on every year's payout, allow trustees to pay providers directly, and name a protector who can replace a trustee who fails. A letter of wishes then tells the trustees, in the grandparents' words, what the money is for; it is not binding, but it guides every discretionary decision.

Enough to do its job, little enough to last. A payout of 3% of the average value over the last three years gives Rs 90 lakh in year one, and the averaging stops one bad market year from cutting a care budget. The special-needs beneficiary's Rs 36 lakh is paid first; the remaining Rs 54 lakh is split between the other two for education and housing, at the trustees' discretion. Because the payout is a share of value, it rises when the trust grows and falls when it shrinks, which is exactly why the care budget is ranked first.

Size the income sleeve in years, as for a retiree. Six years of payouts and costs, about Rs 7 crore, sit in a ladder of high-quality debt maturing year by year; the other Rs 23 crore is invested 70% in diversified equity and 30% in debt. Overall that is about 54% equity, with an assumed return of 9.15%. The ladder means no year's payout has to come from selling equity after a fall, and the growth sleeve refills the ladder each year from its gains.

Test the payout against what is left after inflation and costs. With about 9.1% return, 6% inflation and 0.92% costs, roughly 2% a year can be paid without shrinking the trust in real terms; at 3% it drifts from Rs 30 crore to about Rs 21.8 crore in today's money over 30 years, and at 4% it falls to about Rs 15.9 crore. At 3%, the year-30 payout is still about Rs 65 lakh in today's money, above the Rs 36 lakh care budget, so the first purpose is met. The judgement is 3%, reviewed every three years, accepting a slow real decline in exchange for meaningful help to the other two now.

State the limits before the family signs. Care costs can rise faster than general prices; if they do, the other beneficiaries' share shrinks first, which is the design, and they should be told so now. Tax treatment of the trust, and any concessions for a trust benefiting a person with a disability, must be confirmed. And the choice of trustees matters more than any number here: a trust with a sound policy and a careless trustee fails.