This document discusses the key concepts related to trusts under Indian law. It defines a trust as an obligation annexed to the ownership of property that arises from a confidence placed in and accepted by the owner for another's benefit. The main elements of a valid trust are the author's intention to create it, a definite purpose, property assigned for the trustee's benefit, and certainty of beneficiaries. Trusts are different from concepts like debt, bailment, and agency. The duties, powers, and liabilities of trustees and beneficiaries are also outlined.

1. Established as per the Section 2(f) of the UGC Act, 1956
Approved by AICTE, COA and BCI, New Delhi
Unit 4- Part A
Law of Trusts
S c h o o l o f L e g a l S t u d i e s
R a d h i k a B e l a p u r k a r

2. WHAT IS TRUST?
• According to Indian Trust Act, trust means an obligation annexed to the
ownership of property, & arising out of a confidence reposed in &
accepted by the owner for the benefit of another or for another and
owner.
• Mr. X wants to pass his bungalow (property) to Mr. Y for the benefit of his
minor granddaughter. Mr. X passes his property to Y, because he
reposes(has) confidence on Y. This is nothing but the essence of a trust.

3. TRUST CONT.
The person who declares the confidence is
called the author of the trust.
The person who accepts the confidence is
called trustee.
The subject matter of the trust is called
trust property or trust monetary.
The written document through which trust
is created is called instrument of trust.
The person whose benefit the confidence
is accepted is called beneficiary.

4. TRUST v. DEBT
There a loan has been made
the borrower becomes
the absolute owner of the
money lent, subject to a
contractual obligation to
repay the loan or to perform
some other obligation
specified in the loan
agreement.
The borrower is free to
spend the money however
they like.
Debt When a trust has been
created, the trustee holds
only legal title to the trust
property, the equitable title
being held by the
beneficiary.
The trustee is not free to
spend the money as they
wish but must keep it
separate from their own
money and apply it only for
the purposes of the trust.
Trust

5. TRUST v. BAILMENT
Trustee is equitable
A trustee is the full
owner of the property.
the subject matter of a
trust can be either
movable or
immovable.
Trust
Bailment is a common
law concept
In bailment, the owner
transfers physical
possession of personal
property for a
particular time, but
retains ownership.
Only movable property
can be bailed.
Bailment

6. TRUST v. AGENCY
A trustee is the full
owner of the trust
property.
A trustee acts in his
own right.
If a trustee dies,
trust is not
terminated. A new
trustee is
appointed.
Trust
An agent has no
title to the property
An agent acts on
behalf of his principal
and is subject to his
control.
At common law the
relationship of
principal and
agent terminates on
the death of either
Agency

7. TRUST v. CONTRACT
In a trust unless the
settlor has reserved a
power of revocation, the
trust can only be varied
through the consent of all
beneficiaries or court
order.
Trust
The terms of a contract
can only be varied by the
original contracting
parties.
Contract

8. KINDS OF TRUSTS
Trusts
Public
Trust
Private
Trust

9. PUBLIC TRUST
• It is further divided into charitable and religious trust.
• There is no Central Act applicable to Public Trusts. Various states have
enacted their own statutes.
• Trusts designed for the benefit of a class or the public generally.

10. PUBLIC TRUST
• It is easy to register and manage public trusts.
• It is of permanent character once opened, it cannot be terminated; funds
cannot be deviated for any other purpose than the defined objective of it.
• Duration of trust is indefinite.

11. PRIVATE TRUST
• A trust is called a private trust when it is constituted for the benefit of one
or more individuals who are ascertained.
• Private trusts are governed by the Indian Trusts Act, 1882.
• Private trust may be for limited period for a limited purpose. It may be
modified, or determined as per the trust deed.

12. CREATION OF TRUST
• Section 4 of the Indian Trust Act,1882.
• The elements of valid trust is given under section 4 of the Act.

13. CREATION OF TRUST
Intention of the author
to create the trust.
Purpose of the trust.
The monetary asset is
assigned for the benefit
of the trustee.
Gives control or transfer
the trust property to the
trustee which includes
intention of the author.
Trustee can claim
expenses & salary from
the benefits from the
trust of his work.

14. A VALID TRUST REQUIRES FOUR
CERTAINTIES
Certainty of author’s intention;
Certainty of trust property.
Certainty of object;
Certainty of beneficiary;

15. APPOINTMENT OF TRUSTEES
• A new trustee can be appointed in any of the following case:
1. Any person appointed as trustee disclaims; or
2. Death of trustee; or
3. For continuous 6 months, the trustee is absent from India; or
4. Leaves India to reside abroad; or
5. Is declared insolvent; or

16. APPOINTMENT OF TRUSTEES
6. Desires to be discharged from the duties; or
7. In the opinion of the court is unfit; or
8. Personally incapable to act in the trust.

17. APPOINTMENT OF TRUSTEES
• The new trustee can be appointed by a person nominated for that purpose
in the instrument of trust.
• The appointment has to be by writing and under the signature of the
person making it.
• The court can appoint the official trustee in any case in which only one
trustee may be appointed and such trustee is to be the sole trustee.

18. APPOINTMENT BY COURT
• On the application of the beneficiary, a court may appoint a trustee or new
trustee.
• While appointment, the court has to look into the following aspects:
1. The wishes of the author of the trust as per the instrument of trust.
2. The wishes of the person who was empowered to appoint a new trustee.

19. APPOINTMENT BY COURT
3. The question whether the appointment will promote or impede the
execution of thee trust.
4. The interest of all beneficiaries if there are more than one beneficiaries.

20. DUTIES OF TRUSTEE
1. Execution of Trust
2. Acquaintance of Trust Property
3. Protection of Title of Trust Property
4. Not to set up Title adverse to the beneficiary
5. Take care of the Trust Property

21. DUTIES OF TRUSTEE
6. Convert perishable property
7. Be impartial among the beneficiaries
8. Protect the trust property from adverse beneficiary
9. To maintain and keep books and accounts
10. Investment of Trust money

22. LIABILITIES OF TRUSTEE
1. Liability for a breach of Trust
2. No right of set-off
3. A trustee is not liable for the acts and defaults of his predecessor.
4. The position and nature of liability of co-trustees
5. Under Section 23 of the Act, in certain circumstances, a trustee is liable to
pay simple or compound interest to the beneficiary.

23. RIGHTS OF THE TRUSTEES
1. Right to Title deed
2. Right to reimburse expenses incurred for trust purposes
3. Right to indemnity from breach of trust
4. Right to seek Court’s opinion in managing trust property
5. Right to Settle accounts
6. Right to do all necessary acts in the interest of trusts.

24. POWERS OF TRUSTEE
1. The trustee can sell the trust property where instrument of the trust so
empowers him.
2. A trustee has a power to vary investments.
3. Maintenance of minors.

25. POWERS OF TRUSTEE
4. A trustee can give receipt for the money received on account of the trust.
5. In case of death of one of the trustees, the other trustees have a right to
act.
6. Power to settle disputes.

26. DISABILITIES OF TRUSTEE
1. A trustee who once accepted the trust,
cannot renounce it except:
• (i) with the permission of the Court,
• (ii) with the consent of the beneficiaries
who are competent to contract,
• (iii) by virtue of a special power in the
instrument of the trust.
2. A trustee cannot delegate his office or
any of his duties either to a co-trustee or
to a stranger, except in the following
cases:
• When the instrument of the trust so
provides,
• When such a delegation is in the regular
course of business,
• When such a delegation is necessary,
and
• The beneficiary, being competent to
contract, consents to such a delegation.

27. DISABILITIES OF TRUSTEE CONT.
3. Co-trustees
cannot act singly
4. The trustees
cannot exercise
their discretionary
powers arbitrarily
5. Trustee not to
charge for services
6. A trustee may
not use or deal with
the trust property
for his own use

28. DISABILITIES OF TRUSTEE CONT.
7. No trustee whose duty is
to sell the trust property may
directly or indirectly buy the
trust property
8. No trustee and no person
who has recently ceased to
be a trustee may, without the
permission of the Court, buy,
or become mortgagee or
lessee of the trust property.
9. The trustee and the co-
trustee may not lend the
trust amount to themselves

29. BENEFICIARY
• The person or persons for whose benefit, a trust has been created, is called
the beneficiary or beneficiaries.
• The beneficiary holds the beneficial interest in that property.

30. RIGHTS OF THE BENEFICIARY
1. Right to Rents and Profit
2. Right to specific execution
3. Right to inspect Accounts
4. Right to transfer beneficial interest
5. Right to sue for Execution of Trust

31. RIGHTS OF THE BENEFICIARY
6. Right to proper Trustees
7. Right to follow the trust property in the hands of a third person
8. Right to compel to any act of duty.

32. LIABILITIES OF BENEFICIARY
1. When one beneficiary out of the several commits the breach of trust.
2. Where the beneficiary has an intention to obtain an advantage from the
breach without the consent of the other beneficiaries;
3. The beneficiary is aware of the breach of trust which is committed or there
is an intention to commit it. The beneficiary either conceals it or does not
take any appropriate action to protect the interest of other beneficiaries;
4. Where he deceives the trustee and induces him to commit breach of trust.
5. The other beneficiaries may attach the interest of such a beneficiary until
the loss caused by the breach has been compensated.

33. VACATING THE OFFICE OF TRUSTEE
• The office of a trustee may be vacated either by his death or by his
discharge from his office.
• He may be discharged from his office by the extinction of the trust or by
the completion of his duties or by new appointee etc.

34. EXTINCTION OF TRUSTS
• The extinction of trusts can happen:
1. When its purpose of fulfilled; or
2. When its purpose becomes unlawful; or
3. The fulfilment of the trust’s purpose becomes impossible due to
destruction of trust property or due to any other reason; or
4. When the trust being revocable, is revoked.