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Trust Act
Trust Act
• The Author of the Trust – The person who creates the Trust.
• The Trustee – The person who accepts the responsibilities of the Trust.
• The Beneficiary – The person/persons for whose benefit the Trust is created.
• Purpose of creating a Trust:
• Trusts are generally formed or created to fulfill any or more of the following
objectives:
• For discharge of the charitable and/or religious sentiments of the author of settlor
of the trust, in a way that ensures public benefit;
• For claiming exemption from Income tax U/s 10 or 11, as the case may be, in
respect of incomes applied to charitable or religious purposes;
• For the welfare of the members of the family and/or other relatives, who are
dependent on the settlor of the trust;
• For the proper management and preservation of a property;
• For regulating the affairs of a provident fund, superannuation fund or gratuity
fund or any other fund constituted by a person for the welfare of its employees.
• Who can create a Trust:
• As per Section 7 of the Indian Trusts Act, a trust may be created by every
person competent to contract and by or on behalf a minor, with the
permission of a principal court of original jurisdiction. Following are eligible
to create a Trust.
• Trust by an Hindu Undivided Family;
• Trust by a Minor;
• Trust by a Woman;
• Association of Persons;
• Company.
• two types of trusts in India:
1.Private trusts and
2.Public trusts.
• Private Trust:
• A trust is called a Private Trust when it is constituted for the benefit of one or more individuals who are, or
within a given time may be, definitely ascertained. Private Trusts are governed by the Indian Trusts Act 1882. A
Private Trust may be created inter vivos or by will.
• Unless all the above requisites are fulfilled, a trust cannot be said to have come into existence.
•
• Public Trust
• A trust is called as Public Trust when it is constituted wholly or mainly for the benefit
of Public at large, in other words beneficiaries in the Public trust constitute a body
which is incapable of ascertainment. The Public trusts are essentially charitable or
religious trusts and are governed by the general Law. The provisions of Indian Trusts
Act do not apply on Public Trusts. Like the private trusts, public trusts may be created
inter vivos or by will. The Indian Trusts Act does not apply to public trusts which can
be created by general law.
• This registration would still be required, even if the instrument declaring the trust is
exempt from registration under the Indian Registration Act. In case of a Private Trust
declared by a will, registration will not be necessary, even if it involves an immovable
property. Registration will not be required, of a trust in relation to movable property. In
case of Public Trust, whether in relation to movable property or an immovable property
and whether created under a will or inter vivos, registration is optional but desirable.
• In case of Charitable or religious Trust in relation to an
immovable property, for claiming exemption u/s. 11 of the
I.T. Act 1961 it is essential that the instrument of trust is duly
registered.
• The Crown
• According to the law of England the sovereign may be a cestui que trust, and similarly in India the Government may be a
beneficiary.
• Unborn Child
• An unborn child cannot be said to be a “a person capable of holding property” within the meaning of this section and is therefore
incapable of being a beneficiary.
• Corporation
• In England a trust of lands cannot be limited to a corporation without a “license from the crown”. But since the Mortmain Acts do
not apply to India , a corporation in India may be a censui que trust.
• Alien
• An alien also may be a cestui que trust.
U/S: 51, All the acts of trustee must directed towards the benefit of the trust and
beneficiary.If he makes a profit out of it he will be accountable for it.
• -NOT TO USE TRUST PROPERTY FOR PURPOSE
UNCONNECTED WITH THE TRUST:
A trustee should not make use of the property for any purpose unconnected
with the trust.When he does so, he has to account for the benefit he obtain.
• (i) by consent of all the beneficiaries where all of them are competent to
contract;
• (iii) when its purpose is the payment of author’s debts, it can be revoked at
any time prior to communication of the arrangement to the creditors.