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Administration of trust property by the trustee

  • The trustee is required to full fill the purpose of the trust and to obey the directions of the author of the trust unless they have been duly modified by the consent of all the beneficiaries.
  • In order to do so, the trustee has to acquaint himself as soon as possible, with the nature and circumstances of the trust property and where necessary he is also required to transfer the trust property to himself. He may also reclaim the trust money, invested on insufficient or hazardous security.
  • A trustee has to protect the trust property.
  • In the absence of a contract a trustee is not liable for the loss, destruction or deterioration of the trust property if in the exercise of his duties he has extended due care as a man of ordinary prudence.
  • A trustee is required to keep clear and accurate accounts of the trust property and is also bound to furnish the beneficiaries at their request full and accurate information as to amount and state of the trust property.
  • Where the trust property consists of money and cannot be applied immediately or at an early date to the purpose of the trust the trustee is bound to invest the money on certain government securities prescribed by the Indian Trusts Act.
  • A trustee can apply to the court for its opinion, advice, or direction on issues regarding the management of the trust property if such issues can be adjudicated by the court in a short hearing.

Breach of trust

  • A breach of any duty imposed on a trustee is termed as breach of trust. Where the trustee commits a breach of trust, he is liable to make good the loss, which the trust property or the beneficiary has thereby sustained.
  • However, the trustee is not liable if the beneficiary has by fraud induced the trustee to commit the breach or the beneficiary being competent to do so, has himself, without coercion or undue influence, concurred in the breach, or subsequently acquiesced therein with full knowledge of facts of the case and of his rights as against the trustee.
  • Again, a trustee is not liable for the breach of trust committed by his predecessor or his co-trustee if he has himself exercised due care and diligence requisite of a man of ordinary prudence and has not facilitated or connived the breach of trust.

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