Learning outcome: Students will - learn about the reason why trustees take up trusts - be informed about rights of beneficiaries - be informed about the nature of duties that trustees carry out

1. Preeti Kana Sikder
Lecturer
Department of Law & Justice
Jahangirnagar University
Principles of Trust

2. Rights of the
Beneficiaries

3. Right to Rents and Profits
(Section 55)
OThe beneficiary has, subject to
the provisions of the instrument
of trust, a right to the rents and
profits of the trust-property.

4. Right to Specific Execution
(Section 56)
O Section 56: Right to Specific Execution, Right
to transfer of possession:
The beneficiary is entitled to have the intention of
the author of the trust specifically executed to the
extent of the beneficiary's interest and, where
there is only one beneficiary and he is competent
to contract, or where there are several
beneficiaries and they are competent to contract
and all of one mind, he or they may require the
trustee to transfer the trust-property to him or
them, or to such person as he or they may direct.

5. Illustration
(a) Certain Government securities
(meaning: the ownership of stocks or bonds,
a certificate attesting credit) are given to
trustees upon trust to accumulate the
interest until A attains the age of 24, and
then to transfer the gross amount to him. A
on attaining majority may, as the person
exclusively interested in the trust-property,
require the trustees to transfer it
immediately to him.

6. Illustration
O A transfers certain property to B and
directs him to sell or invest it for the
benefit of C, who is competent to contract.
C may elect to take the property in its
original character.

7. Right to Terminate?
…where there are several beneficiaries and
they are competent to contract and all of one
mind, he or they may require the trustee to
transfer the trust-property to him or them,
or to such person as he or they may direct

8. Right to transfer
beneficial interest (Section 58)
O The beneficiary, if competent to contract,
may transfer his interest, but subject to
the law for the time being in force as to
the circumstances and extent in and to
which he may dispose of such interest

9. Common Provision of
discriminatory disability
relating to Married Women
O Sections 56 and 58 both make a common
provision in respect of a married woman,
so that when the trust property is
transferred for her benefit (she being a
sole trustee) these sections do not enable
her to transfer the property to anyone
which deprives her of her beneficial
interest therein.

10. Right to Inspect (Section 57)
The beneficiary has a right, as against the trustee
and all persons claiming under him with notice of
the trust, to inspect and take copies of:
O the instrument of trust,
O the documents of title relating solely to the trust-
property,
O the accounts of the trust-property and
O the vouchers (if any) by which they are supported,
and
O the cases submitted and opinions taken by the
trustee for his guidance in the discharge of his
duty.

11. Right to Sue for Execution of
Trust (Section 59)
O Where no trustees are appointed or all the
trustees die, disclaim, or are discharged,
or where for any other reason the
execution of a trust by the trustee is or
becomes impracticable, the beneficiary
may institute a suit for the execution of the
trust, and the trust shall, so far as may be
possible, be executed by the Court until
the appointment of a trustee or new
trustee.

12. Right to Compel to any Act of
Duty (Section 61)
OThe beneficiary has a right that his
trustee shall be compelled to
perform any particular act of his
duty as such, and restrained from
committing any contemplated or
probable breach of trust.

13. Right to Proper Trustee
Section 60

14. Onerous Nature of Trust
OHardwicke LC commented in Knight
v Earl of Plymouth:
“A trust is an office necessary in the
concerns between man and man,
and…if faithfully discharged, attended
with no small degree of trouble and
anxiety so that it is an act of great
kindness in anyone to accept.”

15. Why do people consent to
become trustees?
Page 280

16. Duties of Trustees

17. Frederic William Maitland
General Rules regarding duties of Trustees
O Bound to do anything that a
trustee is expressly bidden to
do by the instrument creating
the trust
O May safely do anything that
trustee is expressly authorized
to do by that instrument
O Bound to refrain from doing
anything expressly forbidden
O Within these limits a trustee
must play the part of a prudent
owner and a prudent man of
business

18. Categories of Duties
Positive Negative Duties

19. Negative Duties or Disabilities
(p 289 and 321)
O A duty is imperative. It has to be
performed and no option exists there.
O Positive duties demand certain acts while
negative duties require abstinence from a
trustee.
O Negative duties are termed as disabilities.

20. List of Duties of Trustees
Positive Duties Negative Duties
O Duty to preserve
trust property
O Duty to transfer the
income and corpus
to entitled persons
O Duty to render
accounts and
supply information
O Duty not to make a
profit out of trust
property
O Duty not to
purchase trust
property
O Duty not to delegate
his duties
O Duty not to set up
adverse title

21. Trustee to execute trust
(Section 11)
O The trustee is bound to fulfil the purpose
of the trust, and to obey the directions of
the author of the trust given at the time
of its creation, except as modified by the
consent of all the beneficiaries being
competent to contract.
O Nothing in this section shall be deemed
to require a trustee to obey any direction
when to do so would be impracticable,
illegal or manifestly injurious to the
beneficiaries

22. Duty to preserve trust property
OTrustee to inform himself of state of
trust property: Section 12
OTrustee to protect title to trust property:
Section 13
OTrustee to prevent waste: Section 18
OAccounts and information: Section 19
OConversion of perishable property:
Section 16
OInvestment of trust money: Section 20

23. Conversion of perishable
property (Section 16)
O Where the trust is created for the benefit
of several persons in succession, and the
trust property is of a wasting nature or a
future or reversionary interest, the trustee
is bound, unless an intention to the
contrary may be inferred from the
instrument of trust, to convert the property
into property of a permanent and
immediately profitable character.

24. Illustration
O (a) A bequeaths to B all his property in trust for C
during his life, and on his death for D, and on D's
death for E. A's property consists of three leasehold
houses, and there is nothing in A's will to show that
he intended the houses to be enjoyed in specie. B
should sell the houses, and invest the proceeds in
accordance with section 20.
O (b) A bequeaths to B his three leasehold houses in
Chittagong and all the furniture therein in trust for C
during his life, and on his death for D, and on D's
death for E. Here an intention that the houses and
furniture should be enjoyed in specie appears
clearly, and B should not sell them.

25. Section 20 – Investment of
trust money
O Where the trust-property consists of money
and cannot be applied immediately or at an
early date to the purposes of the trust, the
trustee is bound (subject to any direction
contained in the instrument of trust) to invest
the money on the following securities, and
on no others:-

26. Section 20
O (a) in promissory notes, debentures, stock or
other securities of the Government
O (c) in stock or debentures of, or shares in,
Companies
O (d) in debenture or other securities for money
issued under the authority of any Bangladesh
Act, or on behalf of any municipal body or port
trust or city improvement trust:
O (e) on a first mortgage of immoveable
property situate in Bangladesh
O (f) any other security expressly authorised by
the instrument of trust,

27. Duty to transfer income
O Rights to rents and profits : Section 55
O Right to specific execution: Section 56

28. Duty to render accounts and
supply information
O Right to inspect and take copies of
instrument of trust accounts : Section 57

29. Duty not to make profit (p: 315)
OTrustee may not charge for
services: Section 50
OTrustee may not use trust
property for his own profit:
Section 51

30. Duty not to purchase trust
property
O Trustee for sale or his agent may not buy:
Section 52
O Trustee may not buy beneficiary’s interest
without permission: Section 53

31. Duty not to delegate (p: 311)
Trustee can not delegate: Section 47

32. Duty not to set adverse
title
Trustee not to set up title adverse to beneficiary:
Section 14 (p: 284)

33. Rights of Trustees
(From P:299) Group Practice
ORight to title deed
ORight to reimbursement and
indemnity
ORight to indemnity from gainer by
breach of trust
ORight to take direction from court
ORight to settlement of Accounts