KJA 14 December 2011
R. Muralidhran
Regd Off:- Advocate, Patent Agent
New Excelsior Building,
Law Lecturer,Mediator
7th Floor, A.K. Nayak Marg,
FORT,
MUMBAI-400 001. KRISHNA & SAURASTRI ASSOCIATES
91 22 22006322(6 lines) NO.17, SHESHADRI ROAD,
Fax:-91 22665506/ 07/ GANDHINAGAR,
22006326/ 24932897/ BANGALORE-560 009.
22019894. 080-22356165
mailto:- Fax:-080-22356164.
info@krishnaandsaurastri.com Mobile:-0-94482 47549
mailto:-muralimanu@gmail.com
Offices at: Pune, Ahmedabad and New Delhi
1
LAW OF TRUSTS
INTRODUCTION
The concept of Trust, in the present way (as we
understand it) was not known to ancient Hindu
System. Trust owe their origin to Roman Law and
for British Lawyers, Trust is the “Daughter of Use
A Trust is an obligation annexed to the
ownership of a property and it arises out of the
confidence reposed in the trustee which the
trustee undertakes to discharge.
Whereby the trustee commits to administer the
property for the benefit of another who can be
the owner.
ESSENTIAL FEATURES OF TRUST
For a trust to come into existence, the following
criteria must be fulfilled:
There must be an author of the Trust
The author must commit a property for the
purposes of the Trust
He must have an intention to create a Trust.
The purpose of the trust must be identified.
ESSENTIAL FEATURES OF TRUST CONTD..
The Trustee who will administer the property
should be identified (a trustee may also be the
author)
The Beneficiaries must be identified.
Thus there are three parties to the trust- Author,
Trustee and Beneficiary.
ESSENTIAL FEATURES OF TRUST CONTD..
Under the Law, the Trustee is the legal owner of
the Trust Property. But the Beneficiaries have an
equitable interest in the administration of Trust
Properties.
However this equitable interest of the Beneficiary
will not entitle them to interfere with the Trustee’s
power to administrate the Trust Property so long as
he exercises due care and diligence
The acceptance of the Trustees is essential and
must be specific and explicit
QUASI TRUST OBLIGATIONS
Under common law and by Statutes, obligations
which are similar to the Trust’s Obligations are
known as Quasi Trust Obligations, arising in
fiduciary capacity.
CLASSIFICATION
Broadly Trusts are classified based on the nature
of Beneficiary into:
Public Trust
Private Trust
PUBLIC TRUSTS
When the Beneficiaries are uncertainable class
of people, or
Causes which will incidentally benefit a group
of Humans
It is called Public Trusts
PRIVATE TRUST
When the Beneficiaries are clearly identified
Human Beings, whether in existence or not,
then the Trust is called a Private Trust
The Indian Trusts Act passed in 1882 (effective
from 13th Jan 1882) seeks to govern only
private Trusts.
BREACH OF TRUST
The phrase Breach of Trust under Trust Law, is
totally different from the phrase Criminal
BREACH of Trust in Indian Penal Code.
TRUST V. OTHER MODES
Trust should be distinguished from agency,
bailment, gift and execution of the estate of a
deceased .
To put it simply, Trust is an equitable interest
right, title in a property, distinct from the legal
ownership thereof.
CREATION OF TRUST
As per S.6 of the Indian Trusts Act, a trust deed
is not necessary to create a valid trust sO long
as the creation of the trust is indicated with
reasonable certainty by words and acts.
BENEFICIARY
Beneficiary is a person capable of holding
property and need not be competent to
contract.
A beneficiary can relinquish his equitable
interest in the Trust Property.
CAN MINOR BE A TRUSTEE?
Under S.10 of the Act, though a minor can be a
trustee, if the job involved exercise of
discretion, he cannot execute unless he is
competent to contract.
In such a case, either a natural guardian or a
Court appointed friend will administer the Trust.
ACCEPTANCE AND DISCLAIM OF TRUST
A trust is accepted by words and acts of the
trustee
No one is bound to accept a trust
Instead of accepting a trust, the trustee may,
disclaim it within a reasonable period of time.
OBLIGATIONS OF THE TRUSTEE
He must obey the directions of the authors of
the Trust regarding the administration but at a
later time, with the consent of the Beneficiary,
he can modify the directions.
He should inform himself of the Trust Property
He should protect the title of the Property
He must exercise due care and deligence.
OBLIGATIONS OF THE TRUSTEE
He must be impartial and prevent waste
He is not allowed to set off the Trust Funds to a
claim owed by the Trust to the Trustee.
He is not responsible for the Co-Trustee’s
default.
The Liability of the Co-trustee is not joint but
severed.
RIGHTS AND POWERS OF TRUSTEE
Right to possess trust property and hold its
documents of title
Right to reimbursement of expenses
Right of indemnity and seek Court’s opinion on
the administration of Trust.
RIGHTS AND POWERS OF TRUSTEE
Subject to the powers given under the terms of
the trust and the applicable law, the trustee
has the general right to sell the Trust property
in ways he considers appropriate and
reasonable.
Right to vary investments and give receipts o
behalf of the Trust.
DISABILITIES OF THE TRUSTEES
Trustee cannot renounce after acceptance,
except after Court’s Order.
He cannot delegate trusteeship, except when
the Trust Deed so provides or when the
Beneficiary consents to it.
Co-trustees cannot act individually.
The Trustee should exercise discretionary
powers reasonably and good faith and the
same can be controlled by Civil Courts.
DISABILITIES OF THE TRUSTEES
He cannot charge for service, except as
provided in the Trust Deed
He may not use the Trust Property for his own
benefit
He should not buy the Beneficiaries property
without the Court’s permission.
Co-trustees may not lend between themselves.
BENEFICIARIES RIGHTS
Right to receive rent and profit
Right to specific execution and to compel any
act or duty.
Right to inspect and take copies of Trust Deed,
resolutions, accounts etc.
BENEFICIARIES RIGHTS
Subject to the provisions of the Trust Deed and
the applicable law, Beneficiary has the right to
transfer his interest.
Right to sue for execution of the Trust
Right to Proper Trustees
EXTINGUISHMENT OF TRUST
A Trust Comes to an end when
Its purpose is fulfilled
Its purpose becomes unlawful
Its purpose cannot be fulfilled
If it is a revocable trust and is thus revoked.
By completion of duties of the Trust
By means prescribed in the Trust Document.
By appointment of new Trustees.
REMOVAL OF TRUSTEES
A Trustee may be removed when
He is wanting in honesty
Lacks reasonable capacity to administer the
Trust
Proven Infidelity to Trust Obligations
By consent of Beneficiaries
By order of a Court.
KJA 14 December 2011
Acknowledgements..
• Adhunika PremKumar (2014 Batch, Christ University)
27
THANK YOU FOR
A PATIENT HEARING
