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Definition of Trust

The document defines a trust as an obligation annexed to the ownership of property that arises from a confidence placed in and accepted by the owner, or declared and accepted by the owner, for the benefit of another person or persons. A trust involves the transfer of property from the owner (settlor) to another person (trustee) to hold for the benefit of a third person (beneficiary). A trust of immovable property must be created through a registered document and specify the intention to create a trust, its purpose, the beneficiary, the trust property, and the transfer of the property to the trustee. A trust can also be created through a declaration of trust by the owner or via a will (testamentary trust).

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342 views3 pages

Definition of Trust

The document defines a trust as an obligation annexed to the ownership of property that arises from a confidence placed in and accepted by the owner, or declared and accepted by the owner, for the benefit of another person or persons. A trust involves the transfer of property from the owner (settlor) to another person (trustee) to hold for the benefit of a third person (beneficiary). A trust of immovable property must be created through a registered document and specify the intention to create a trust, its purpose, the beneficiary, the trust property, and the transfer of the property to the trustee. A trust can also be created through a declaration of trust by the owner or via a will (testamentary trust).

Uploaded by

Kurian Punnoose
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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Definition of Trust

Creation of a trust, particularly relating to an immoveable property is also a specie of


transfer of property. Trust is defined in section 3 of the Trust Act, 1882 as " an
obligation annexed to the ownership of property and arising 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. In simple words it is a transfer of
property by the owner to another for the benefit of a third person alongwith or without
himself or a declaration by the owner, to hold the property not for himself and another.

Requirements of a Trust
A trust is not a contract of agency to hold the property, as in that case there would be
no transfer of the property. In trust there is a transfer from the owner to the trustee
subject to certain terms and conditions. Bailment is also a kind of trust, but in
bailment also there is no transfer of any interest in the property, but only a transfer of
possession without ownership. Thereof, a trust is essentially a transfer of property by
one to the other to be held by the other for the benefit of some person or for carrying
out some object. It is no also a sale because a sale cannot be conditional and in sale
there is consideration which is absent in a trust. The purpose of a trust must be lawful,
that is,

It should not be forbidden by law.


It should not be of such nature that, if permitted it could defeat the provisions of any
law.
It should not be fraudulent.
It should not involve or imply injury to the person or property of another or
It should not be such as would be regarded by a court as immoral or opposed to the
public policy.
Where a trust is created for two purposes one of which is lawful and the other is not
and the two purposes cannot be separated, the whole trust is void.

Creation of Trust
A trust of immoveable property can be created by two ways. One by a nontestamentary document and another by a testamentary document such as a will. In
other words, a trust regarding a immoveable property cannot be created orally but it
must be by a document duly registered. A trust of a moveable property can be created
either by a document or delivering the property to the trustee with necessary oral
directions. If the directions are given in writing it would amount to a trust by a nontestamentary document which may or may not be registered.

A person who creates a trust is called the settlor, the person to whom the the property
is transferred on trust is called a trustee and the person for whose benefit the property
is transferred is called the beneficiary or "cestuique trust" .

Deed of Trust
A trust relating relating to an immoveable property is required to be created by a
document and such document must state and contain five essential things with
reasonable certainty namely :

the intention on the part of the author of the trust or settlor to create a trust.
the purpose of the trust.
the beneficiary.
the trust property, and
transfer of the property to the trustee.

Declaration of Trust
A trust can also be created by the author himself declaring that he would hold the
property, not as owner, but as a trustee for the benefit of some person or persons
including himself and in that case the transfer of property is not necessary as one need
not transfer his property but in such a case the declaration of trust is by the owner and
he alone should be the trustee. Such a declaration would, however, require registration
under the Registration Act.

Testamentary Trust
A trust can also be created by a testamentary document that is by Will and the same
conditions as mentioned in Section 6 of the Trust Act are required to be fulfilled. such a
Will also does not require registration
A trust is also created :

by application of employed trust or


as a constructive trust or
as derivative trust.
But they are created by fiction by of law and cannot be subject matter of conveyancing

Who can Create a Trust


A Trust can be created by any person competent to contract or even by a manner with
the authority of a competent court and respect of any property which is transferable
and over which the author of the trust has dispossessing power.

Trust, Private and Public


A Trust may be Private and Public.
When the purpose of the trust is to benefit an individual or a group of individuals or his
or their descendants for any legal person and who is capable of holding property, it is a
private trust.
When the purpose of the trust is to the benefit the public or any section of the public,
it is public trust.

Who can be a trustee


A trustee can be any person that is, an individual or a corporate body or a corporate
sole, capable of holding property and competent to contract. and he must accept the
trust.

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