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
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,
should not be forbidden by law.
should not be of such nature that, if permitted it could defeat the provisions
of any law.
should not be fraudulent.
should not involve or imply injury to the person or property of another or
should not be such as would be regarded by a court as immoral or opposed to the
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 non-testamentary 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 non-testamentary 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
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 :
intention on the part of the author of the trust or settlor to create a trust.
purpose of the trust.
trust property, and
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.
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
application of employed trust or
a constructive trust or
they are created by fiction by of law and cannot be subject matter of
Who can Create a
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
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
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.