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LAW OF TRUST

TRUST ACT, 1882


A trust is an obligation annexed to the ownership of property and arising out of
confidence
reposed in and accepted by the owner or declare and accepted by him, for the benefit
of another
and the owner.
Trustee
Settler
Beneficiary
Trust property
Instrument of trust
Classification of trust:
1. Public or charitable
2. Private
3. Express
4. Implied
5. Constructive
6. Executed
7. Executory
Purpose of trust:
1. Fraudulent
2. Forbidden by law
3. If permitted ,...defeat the provision
4. Involves any injury to the person
5. As immoral
6. Opposed to public policy
Declaration of trust:
Immovable property.......declared by non-testamentary instrument
Movable property........declared as aforesaid or unless the ownership of property is
transferred to
the trustee.
Creation of Trust:
When the author of the trust indicates with reasonable certainty by words or acts;
1. The intention on his part to create it
2. The purpose of property
3. The beneficiary
4. The trust property
Who may create a trust:
Every person competent to contract
With the permission of a principal civil court of original jurisdiction, by or on behalf
of
minor.
Who may be beneficiary:
Person cable of holding property

Who may be a trustee:


Every person capable of holding property, where trust involves the exercise the
discretion, it is
necessary that he must be a person competent to contract.
Duties of Trustee:
1. Duty to fulfill the purpose
2. Duty to acquaint
3. Duty to protect the title
4. Duty not to set up title adverse to beneficiary
5. Duty to exercise reasonable care
6. Duty to convert perishable property
7. Duty to be impartial
8. Duty to prevent waste
9. Duty to maintain accounts
10. Duty to invest
Liabilities of Trustee:
1. Personally liable and his estate after his death
2. Liable for interest in addition to the damages
3. More trustees than one , liability is joint and several
4. Not liable for default of his predecessor and for default of his co-trustees
Rights of Trustee:
1. Right of possession (instrument of trust & all other documents)
2. Right of reimbursement
3. Right of lien (pays out of pocket)
4. Right of indemnify
5. Right to apply to court
6. Right to settlement of accounts
Power of trustee:
1. Power to sell
2. Power to convey
3. Power to vary investments
4. Power to apply property
5. Power to give receipts
6. Power to copound
Disability of trustee:
1. Renunciation of trust (perm of civil court, beneficiary, special power reserved in
Instrument of trust)
2. Delegation of office (sec 47) (it can, instrument provides, absolutely necessary,
ordinary
course of business, consent of beneficiary if he is competent to contract)
3. Execution of trust (sec 48) (all co-trustee)
4. Right of remuneration (50)
5. Use of trust property (sec 51)
6. Purchase of trust property. (sec 52, 53)

7. Lend of trust property (sec 54) (should not lend to one of himself on mortgage or
personal
security)
8. Court may control discretionary power of trustee
Vocation of the office of Trustee: Sec 70
1. By his death
2. By his discharge from his office which arises:
By extinction of the trust
Completion of his duties
By such means as may be described by the instrument
By appointment of new trustee under this act
By consent of beneficiary, or by more beneficiary if, competent to contract
By court to which a petition for his discharge is presented under this
ACT.sec 71.72
Extinction of Trust: sec 77
conditions when the trust is extinguished;
1. Purpose completely fulfilled
2. Purpose become unlawful
3. Fulfillment become impossible
4. When trust being revocable, is expressly revoked\
Revocation of Trust:
1. Trust created by will may be revoked at the pleasure of the author of the trust
2. A trust may be revoke:
When all the beneficiaries are competent to contract
Trust declared by non-testamentary instrument or by words of mouth in
exercise of power of revocation expressly reserved to the auther of trust.
Trust is for payment of debts of the author, and has not been
communicated to the creditors at the pleasure of the auther of trust.
Appointment of New Trustee: sec 73
In the following situations;
1. Appointment on death of trustee
Trustee dies
Appointed disclaim
More than 6 months absents from country
Leave country for staying abroad
Declared insolvent
Trustee refuses or becomes unfit or incapable to act
Accepts inconsistent trust
2. Appointment by court (when it is impracticable to appoint new trustee under
section 73)

Who can appoint:


1. Person nominated for that purpose by instrument
2. Author of the trust if survives
3. Surviving trustee or the legal representative of such last trustee
4. Retiring trustee with the consent of the court

Rules for appointment:


In appointing new trustee the court shall have regard to:sec 74
1. Wishes of the auther of trust express in instrument
2. Wishes of person if any, empowered to appoint a new trustee
3. The question whether the appointment will promote or impede the execution of
trust
4. When there are more beneficiaries than one, to the interest of all such beneficiaries