Indian Trusts Act, 1882

Trust and trustees is a concurrent subject [Entry 10 of List III of Seventh Schedule to Constitution]. Thus, the Act will apply all over India except when specifically amended / altered by any State Government. The Indian Trusts Act was passed in 1882 to define law relating to private trusts and trustees. Indian Trusts Act 1882 deals with all the matters related to trusts, trustee and beneficiaries A trust is not a legal person. Property of trust is held in name of trustee for benefit of beneficiary.

What is a trust? [Section 3 ].

A trust is 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 along with or without himself or a declaration by the owner, to hold the property not for himself and another. The person who reposes the confidence is called author of trust (testator), The person who accepts the confidence is called trustee and The person for whose benefit the confidence is accepted is beneficiary. The subject matter of trust is called trust property or trust-money. The beneficial interest or interest of the beneficiary is his right against the trustee as the owner of trust-property. The instrument by which trust is declared is called as instrument of trust. Thus, when a property is held by one person as trustee for the benefit of another, it can be regarded as a trust. Trusts are governed by Indian Trust Act, as may be modified by State Governments.

Trust are generally, formed or created to fulfill any or more of the following Objectives:

For discharge of the charitable and/or religious sentiments of the author of settler of the trust, in a way that ensures public benefit; For claiming exemption from Income tax U/s 10 or 11, as the case may be, in respect of incomes applied to charitable or religious purposes; For the welfare of the members of the family and/or other relatives, who are dependent on the settler of the trust; For the proper management and preservation of a property; For regulating the affairs of a provident fund, superannuation fund or gratuity fund or any other fund constituted by a person for the welfare of its employees;

HOW TO CREATE A TRUST Trusts are created when the settler of the property transfers property or provides benefits for the welfare of beneficiaries or for the usage of public purposes. Four essential conditions are necessary to bring into being a valid trust.

The person who creates a trust (settler) should make an unequivocal declaration binding on him. He must transfer an identifiable property under irrevocable arrangement and totally divest himself of the ownership and the beneficial enjoyment of the income from the property . The objects of the trust must be defined and specified. The beneficiaries are specified.

WHO CAN CREATE A TRUST As per Section 7 of the Indian Trusts Act, a trust may be created by every person competent to contract and by or on behalf a minor, with the permission of a principal court of original jurisdiction. Following are eligible to create a Trust.

Trust by an Hindu Undivided Family; Trust by a Minor; Trust by a Woman; Association of Persons; Company(eg: Debenture-Redemption Fund Trust for redemption of its debentures);