Posted By: prashant on January 16, 2008 INDIAN TRUSTS ACT, 1882 I.

Introduction Trust can very well be understood as confindence. The Indian Trusts Act concerns itself only with the codification of "law relating to private trusts and trustees" and enacts (Section 1 ) that "nothing herein contained affects the rules of Mohammadan laws as to waqf, or the mutual relations of the members of an undivided family as detemined by any customary or personal law, or applies to public or private religious or charitable endowments, or to trusts to distribute prizes taken in war among the captors. II. What is Trust? Section 3 of the Indian Trusts Act, 1882 defines a trust : "A trust is an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by him, for the benefit of another, or of another and owner". Thus, the person who reposes or declares the confidence is called the "author" of the "trust"; the person who accepts the confidence is accepted is called "beneficiary"; the "beneficanl interest" or "interest" of the beneficiary is his right against the trustee as owner of the trust property; and the instrument if any, by which the trust is declared is called the "instrument of trust". However, the trust should not fail because of the violation of rule against perpetuity. Who may create a trust? A trust may be created (a) by a person competent to contract and (b) with the permission of a principal civil court of original jurisdiction, by or on behalf of a minor; but subject in each case to the law for time being in force as to the circumstances and extent in and to which the author of the trust may dispose of the trust property. Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind and is not disqualified from contracting by any law to which he is subject. There is no particular form for the creation of a trust. It may be created by any language sufficient to show the intention and no technical words are necessary. Who may be a Trustee? Every person capable of holding property may be a trustee; but, where the trust involves the excercise of discretion, he cannot it unless he is competent to contract. No one is bound to accept a trust. A trust is accepted by anywords or acts of the trustee indicating with reasonable certainty such acceptance. A beneficiary is capable of acting as trustee. An executor of a will may become trustee by his dealings with the assets. When an executor is functus officio as to any of the assets and yet retains them, he becomes trustees in respect of those assets. Who may be a beneficiary? Every person capable of holding property may be a beneficiary. A proposed beneficiary may renounce his interest under the trust by disclaimer addressed to the trustee, or by setting

up, with notice of the trust, a claim in consistent threwith, (Section 9 of the Indian Trusts Act). An unborn child cannot be beneficiary of a trust because an unborn child cannot hold property under the provisions of the Transfer of Property Act. Registration of Trust Section 5 of the Trusts Act provides that to be valid a trust in relation to immovable property should be declared by a non-testamentary instrument in writing signed by the author of the trust or the trustee, and registered or by the will of the author of the trust or of the trustee. As to the trust in respect of movable property the same would be valid if effected in the manner aforesaid, or, if the propertys ownership is transferred to the trustee. Subject to this trust is created when the author of 1. the trust indicates with reasonble certainty by any words or acts an intention on his part to create thereby trust

2. the purpose of the trust

3. the beneficiary and

4. the trust property, and transfers the trust property to the trustee (expect where the trust is declared by "will" or the author of the trust himself is to be the trustee).

Trust Property The subject-matter of a trust must be property transferable to the beneficiary. It must not be a merely beneficial interest under a subsisting trust. (Section 8 of the Indian Trusts Act). Accordingly, managing, agency is property capable of being held in trust. In law there is no bar to creation of a trust in respect of property burdened with obligations. A business can also be the subject-matter of trust. Registration A deed of a private trust involving transfer of immovable property is compulsorily registrerable according to Section 5 of the Trusts Act. Registration in cases of charitable or religious trusts or wakf would be compulsory registered under the Registration Act if the value of the property involved exceeds Rs.100. Stamp Duty The instrument of declaration or revocation of trust made in writing would be able to stamp duty under Article 64 of the Stamp Act. However, this rule will not apply to a trust created under a will.