UNIVERSITY OF ASIA PACIFIC

DEPARTMENT OF LAW AND HUMAN RIGHTS

Assignment on

Equity and Law of Trust

Submitted By
Name: Asmaul Hosna
Registration no: 23111021
Batch no: 36
Submitted To: Mr. Forhad Hossain (Lecturer)

Date of Submission: 02/05/202

A critical overview on the Trust Act, 1882:
The Trust Act, 1882 define the trust
 Brief History of Trust Law:
Trust law originated in ancient Rome before becoming established in
medieval England. In ancient Rome, only testamentary trusts were
allowed, and they only took effect after the testator's death. During the
Crusades in England, a conflict emerged when knights entrusted their
property to others, only to have the trustees deny their claims upon
their return. To respond to these allegations, the equity courts were
formed and they acknowledged their validity. Justice Joseph Story was
the initial individual who instilled in him the belief to trust.
2. Different type of trust:
Trust comes in various forms. Trust can be categorized in various ways.
• Responsibilities of trustees:
The fast brown fox leaps over the inactive dog. Simple Trust: A trust not
specified by the author, also referred to as "bare". confidence.
2. Special Trust: A trust in which the grantor clearly defines the trust's
intended purpose.
• Purpose of the trust:
The scientists conducted experiments to test their hypothesis.
Private Trust: A trust that provides benefits for specific individuals or a
person. The cat's fur was soft and fluffy. Public Trust: A trust that
provides benefits for the general public.
- Method of production:
The cat chased the mouse around the house. - The mouse was chased
around the house by the cat. Expressor makes a trust explicitly by using
written or verbal terms.
The employee was not able to attend the meeting due to a conflicting
schedule. Implied Trust: A trust formed through legal implication.
3. Constructive Trust: This type of trust is created in writing, without a
specific.
presence of possession.
4. Resulting Trust: A trust in which the beneficiary's interest in the trust
property arises.
returning to the person who placed their trust.
"The company's revenue increased by 10% last quarter due to strong
sales." Precatory Trust: A trust formed through the use of precatory
language.
6.. Secret Trust: A trust that is formed only when a transfer occurs.
3. Different type of trust:
Section 3 of the Trust Act, 1882 defines a trust. It states that a trust is
an obligation annexed to the ownership of property, arising out of a
confidence reposed in and accepted by the owner, or declared by him
for the benefit of another. The person who reposes or declared the
confidence is called the ‘author of the trust’; the person who accepts it
called as “trustee” for whom the trust made is called “beneficiary”
In Allahabad Bank v. CIT, 1954 stated that, there is no trust where
obligation is absent.
4. Creation of trust:
Creation of a trust can be divided into some parts and they are:
• Lawful purpose: Lawful purpose of a trust is defined in the section 4
of the Act. According to this section the purpose is,
1. Forbidden by law
2. It’s nature defeats any provisions of any law
3. Is fraudulent
4. Involves or implies any injury to any person or property
Then the purpose will be considered as unlawful purpose and trust
can’t be created.
• Trust of immovable and movable property: If the trust property is
immovable then it have to declared through the non-testamentory
written instrument by the trust creator or the trustee. And if the trust
property is movable is can not be valid unless the ownership of the
property is transferred to the trustee. These are stated in the section 5
of the Act.
• Conditions of the author of the Trust: Section 6 states the conditions
regarding the author of the trust which are:
1. The author must express the intention of creation of a trust.
2. Specify the purpose of the trust
3. They must identify the beneficiary
4. The trust property must be defined clearly
5. Must transfer the property to the trustee.
5. Trust duties, liabilities, rights and power:
Section 11: The trustee is bound to fulfil the purpose of the trust and to
obey the directions of the author of the trust given at the time of its
creation.
Section 14: The trustee must not for himself or another set up or aid
any title to the trust- property adverse to the interest of the
beneficiary.
Section 15: A trustee is bound to deal with the trust-property as
carefully as a man of ordinary prudence will deal with such property if it
were his own.
Section 26: Subject to the provisions of sections 13 and 15, one
trustee is not as such liable for a breach of trust committed by his co-
trustee.
Section 27: Where co-trustees jointly commit a breach of trust or
where one of them by his neglect enables the other to commit a breach
of trust, each is liable to the beneficiary for the whole of the loss
occasioned by such breach.
Section 31: A trustee is entitled to have in his possession the
instrument of trust and all the documents of title (if any) relating solely
to the trust-property.
Section 32: Every trustee may reimburse himself or pay or discharge
out of the trust-property.
6. Removal of trustees:
According to section 70 the office of a trustee is vacated by his death or
his discharge from his office.
According to section 71 the trustee may be discharged from his office
only as follows:
(a) by the extinction of the trust;
(b) by the completion of his duties under the trust;
(c) by such means as may be prescribed by the instrument of trust;
(d) by appointment under this Act of a new trustee in his place;
(e) by consent of himself and the beneficiary, or, where there are more
beneficiaries than one, all the beneficiaries than one, all the
beneficiaries being competent to contract, or
(f) by the Court to which a petition for his discharge is presented under
this Act.
7. Revocation of trusteeship:
Section 78: A trust created by will may be revoked at the pleasure of
the testator. A trust otherwise created can be revoked only-
(a) where all the beneficiaries are competent to contract by their
consent
(b) where the trust has been declared by a non-testamentary
instrument or by word of mouth.
8. Right and liability of a beneficiary:
The beneficiary is entitled to receive the rental income and profits from
the trust property, and they have the option to transfer the property to
the trustee or another person of their choosing. He is entitled to these
rights as per sections 55, 56, and 58 of the Trust Act.
In accordance with section 57 of the Act, the beneficiary is entitled to
access and review the trust instrument or property documents. If the
trustee improperly uses trust property for his own benefit, the
beneficiary can take legal action against him under section 66 of the
Act. If the trustee passes away, refuses their responsibilities, or if
carrying out the trust becomes unfeasible, he is entitled to file a lawsuit
under section 58 of the Act.
Responsibility: In case the recipient commits an action that violates
trust and profits from it, the other recipients can delay receiving their
shares until the debt is settled, as stated in section 68 of the Act.
9. Breach of trust and its legal remedy under the trust act:
Section 23: contract, has himself, without coercion or undue influence
having been brought to bear on him, concurred in the breach, or
subsequently acquiesced therein, with full knowledge of the facts of
the case and of his right as against the trustee.
A trustee committing a breach of trust is not liable to pay interest
except in the following cases:
(a) where he has actually received interest:
(b)where the breach consists in unreasonable delay in paying trust-
money to the beneficiary
(c)where the trustee ought to have received interest, but has not done
so:
(d)where he may be fairly presumed to have received interest.
(e)where the breach consists in failure to invest trust-money and to
accumulate the interest or dividends thereon, he is liable to account for
compound interest (with half-yearly rests) at the same rate.
(f) where the breach consists in the employment of trust-property or
the proceeds thereof in trade or business, he is liable to account, at the
option of the beneficiary.
Legal remedies for breach of trust under the Trust Act usually include
actions for damages or removal of trustees for misconduct.
Beneficiaries may also ask the trust or to provide instructions.
10: Advantage and disadvantage of trust:
Advantages of trust:
1. Avoidance of probate: In a trust the trust property directly goes to
the beneficiary without going through the probate, with saves the time,
expenses also.
2.Flexible and control over property: In trust it is flexible to use your
own terms and conditions and give the instructions how the
beneficiaries will get the property. It also allows to have the full control
over the property.
3. Protection of asset:Trust allows to have protect over the asset and it
is managed by the trustee.
4. Reduction of Taxs: By a trust it may reduce the estate taxes.
5.Avoidance of Family Dispute: In trust the instructions of how to
distribute the property is said that ensure that the assest will be
distributed by the will of the trustor.
Disadvantages of trust:
A trust sometimes may convey to lose control over the assets, specially
in irrevocable trust. Then a trust can be complex in nature and to
maximize the benefits of the beneficiary the trust property is often
damaged. If the trustor is not sure that the trust will cause him more
trouble then he can call the estate planning attorney.
11.Extinction of Trust:
The extinction of a trust is discussed in the section 77 to 79. Trust can
be extincted if the purpose of the trust is fulfilled or it becomes
unlawful or impossible. If the trustor wants to revoke the trust he can
revoked it or if the terms are not expressed it can also be revoke.
12. Conclusion:
Anyone who can own property has the ability to serve as a trustee, as
long as they are capable of getting into sign agreements and use
independent judgment when carrying out a trust. No one needs to trust
me. Any actions or statements made by the trustee that show
acceptance of the trust will be considered as acceptance of the trust.