The document discusses key concepts related to the law of trusts in Pakistan. It defines a trust and provides key terminology used in trust law such as author of trust, trustee, beneficiary, trust property, and breach of trust. It outlines the lawful and unlawful purposes of trusts according to the Trust Act of 1882. The document also discusses the responsibilities of trustees which include accomplishing the purpose of the trust according to the trust instrument, protecting the title of trust property, dealing with trust property carefully, and being impartial. It covers the rights of trustees and how a trustee can be discharged.

1. LAW OF TRUST

2. Presented By Rizwan
Ghani
IQRA NATIONAL UNIVERSITY
PESHAWAR PAKISTAN

3. CONTENTS
Definition Of Trust
Terminologies
Object Of The Trust
Status Of Unlawful Trust
Resposibility Of Trustee
Rights Of Trustee
Discharge Of Trustee

4. 1. DEFINITION OF TRUST:
A “trust” is an obligation annexed to the ownership of property, and
rising out of a confidence reposed in and accepted by the owner, or
declared and accepted by him, for the benefit of another, or of
another and the owner.
Section 3 of the Trust act 1882
Author Of Trust,
Trustee, Beneficiary,
Trust Property,
Beneficial Interest,
Instrument Of Trust
And Breach Of Trust Along With Few Other Terminologies

5. ◎2. TERMINOLOGIES
◎Author Of The Trust :
The person who reposes or declares the confidence is called the “author of the
trust”.
◎Trustee:
The person who accepts the confidence is called the “trustee” of the trust.
◎Beneficiary:
The person whose benefit the confidence is accepted is called the “beneficiary”
of the trust.
◎Trust Property/ Money:
The subject-matter of the trust is called “trust-property” or “trust-money”.

6. ◎TERMINOLOGIES
◎Beneficial Interest/ Interest:
The “Beneficial Interest” Or “Interest” Of The Beneficiary Is His Right Against
The Trustee As Owner Of The Trust-property.
◎Instrument Of The Trust:
The Instrument, If Any, By Which The Trust Is Declared Is Called The
“Instrument Of The Trust”.
◎Breach Of Trust:
A Breach Of Any Duty Imposed On A Trustee, As Such, By Any Law For The
Time Being In Force, Is Called A “Breach Of Trust”.

7. The Trust Act 1882 clearly defines the objects for which the trust can be created. Section 4 of
the Trust Act elaborates the purposes for which the trust can be created along with the legal
restraints which bars the creation of a trust. According to section 4 trust act:
Lawful purpose:
A trust can only be created for any lawful purpose.
When the purpose is considered to be unlawful
The purpose of a trust would be considered as unlawful under the following situations:
When it is forbidden by law,
When it is of such a nature that, if permitted, it would defeat the provisions of any law,
When it is fraudulent,
When it involves or implies injury to the person or property of another,
When the Court regards it as immoral or opposed to public policy.
OBJECT OF THE TRUST

8. “
◎Status of unlawful trust
◎Every trust of which the purpose is unlawful is void.
◎If trust is created for more than one purposes
◎Where a trust is created for two purposes, of which one is lawful
and the other unlawful and the two purposes cannot be
separated, the whole trust is void.

9. Responsibilities Of The Trustee
◎
◎Section 11 states the foremost duty of the trustee is the accomplishment of the
purpose of the trust, and obedience to the directions of the author of the trust
given at the time of its creation. The trustee is not bound to obey any direction when
doing of the same is impracticable, illegal or manifestly injurious to the beneficiaries.
◎Section 12 states that a trustee is bound to acquaint himself of, with the nature
and circumstances of the trust-property, transfer of the trust-property to himself
and (subject to the provisions of the instrument of trust) to get in trust-moneys
invested or insufficient or hazardous security.
◎It is the responsibility of the trustee to protect title to trust-property. He is bound
to maintain and defend all such suits, and (subject to the provisions of the instrument
of trust) to take such other steps as, regards being had to the nature and amount or
value to the trust-property, may be reasonably requisite for the preservation of the
trust-property and the assertion or protection of the title thereto.
◎Trustee is under duty to not to set up title adverse to beneficiary - The trustee
must not for himself of another set up or aid any title to the trust-property adverse to
the interest of the beneficiary.
◎

10. Responsibilities Of The Trustee
◎A trustee is bound to deal with the trust-property as carefully as a man of ordinary
prudence would deal with such property if it were his own; and, in the absence of a contract
to the contrary, a trustee so dealing is not responsible for the loss, destruction or deterioration
of the trust-property.
◎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.
◎Where there are more beneficiaries than one, the trustee is bound to be impartial, and
must not execute the trust for the advantage of one at the expense of another.
◎Where the trust is created for the benefit to several persons in succession and one of them
is in possession of the trust-property, if he commits, or threatens to commit, any act, which is
destructive, or permanently injurious thereto, the trustee is bound to take measures to
prevent such act.
◎A trustee is bound to keep clear and accurate accounts of the trust-property and to
furnish the beneficiary with full and accurate information as to the amount and state of the
trust-property, as and when requested by him.
◎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 to invest the money only on the
securities mentioned in the Act, and not anywhere else.

11. accomplishment of
purpose of trust
according to
instrument of trust
to acquaint himself
of the nature and
circumstances of
trust property
to protect title of the trust
property
not to setup title adverse to
the interest of the beneficiary
to deal with the trust property
carefully
to convert property into
permanent and immediate
profitable character
to be impartial

12. Rights Of The Trustee
•Right To Have Instrument Of Trust And All The Documents
Of TitleSection 31 Of Act
•Right To Reimbursement Of Expenses And To Be
Recouped For Erroneous OverpaymentsSection 32 Of Act
•Right To Indemnity From Gainer By Breach Of Trust
Section 33 Of Act
•Right To Apply To Court For Opinion In Management Of
Trust-propertySection 34 Of Act
•Right To Settlement Of Accounts
Section 35 Of Act
•All Acts Which Are Reasonable And Proper For The
Realization, Protection Or Benefit Of The Trust-property,Section 36 Of Act

13. Discharge Of Trustee –
According to the section 71 of the Trust Act, The trustee may be
discharged from his office only as follows:-
By the extinction of the trust;
By the completion of his duties under the trust; THE TRUST ACT 1882
By such means as may be prescribed by the instrument of trust;
By appointment under this Act of a new trustee in his place;
By consent of himself and the beneficiary, or, where there are more
beneficiaries than one, all the beneficiaries being competent to contract;
or
By the Court to which a petition for his discharge is presented under this
Act.

14. Appointment of new trustee
appointment of new trustees on death, etc.
A new trustee may be appointed in the following situations: [sec-73]
(a) trustee dies
(b) trustee appointed disclaims
(c) trustee is absent for more 6 months fr0m a country
(d) trustee leaves the country for staying aboard
(e)trustee is declared insolvent
(f) trustee refuses or becomes unfit to act
(g) trustee accepts inconsistent trust.
Appointment by court –
when any vacancy or disqualification occurs and it is impracticable to
appoint a new trustee under section '73, the court on application of beneficiary
' may appoint a new trustee accordingly. [Sec. 741] wh0 appoints trustee
anew trustee maybe appointed in his place by:
1. The person nominated for that -purpose by the instrument.
2. The author of the trust; if survives.
3. The surviving trustee-or the legal representative of such last trustee.
4. The retiring trustee with the consent of court. [Sec 73]

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