Trust is an arrangement established at the request of an individual in which one or more individuals hold the individual’s property in trust for the good of others and are obligated to use and maintain it.

Individuals may use a trust to direct the transfer of their assets during their lifetime or after they die. There are several forms of trusts, as well as numerous reasons for their formation. A trust can be established for the good of the individual who established it, a surviving spouse or minor children, or for a charitable cause. Though the statute allows for a number of trusts, trust relationships that aim to evade creditors or legitimate obligations will be found void by the court.

The law of trusts is complex and voluminous, but it primarily concerns whether a trust has been established, whether it is a public or private trust, whether it is legal, and whether the trustee has lawfully managed the trust and its assets.

In the law of trusts, a fiduciary partnership occurs while the settlor depends on the trustee and puts special confidence in her. To protect and represent the beneficiaries’ wishes, the trustee shall behave in good faith, with absolute integrity and due regard. The trustee has a fiduciary contract with the trust’s beneficiaries.

A trustee obtains legitimate rights to the trust res, implying that the trustee’s interest in the property tends to be one of full ownership and custody, but the trustee is not entitled to any income from it. The beneficiary owns the right to profit from the land, also known as fair title.

The settlor bestowed the trustee’s duties and powers, as well as the beneficiary’s rights, on the trust when he established the trust.

In India, the arrangement of trust is governed by the Indian Trust Act, 1882. It gives the various provisions which is necessary to provide clarification while creating the arrangement of trust.

The arrangement of trust usually involves:

  • The author of the trust is the one who declares the trust.
  • The trustee is the one who acknowledges the trust.
  • The trust’s subject matter is referred to as trust property or trust monetary.
  • The instrument of trust is the written record that establishes trust.
  • The person for whose benefit the trust is agreed is referred to as the beneficiary.

For example, if a parent who gives a bank some stock to handle for a child, with orders to give him dividend checks each year before he reaches the age of 21, at which point he will receive all of the stock. The settlor is the father, the trustee is the fund, the trust res is the stock, and the beneficiary is the kid.


Any person competent to contract, according to SECTION 7 of INDIAN TRUST ACT,1882 can establish a trust. However, if the trust is formed on behalf of a minor, approval from the civil court should be sought first.


A person who is capable of owning property can be a beneficiary under the SECTION 9 of the INDIAN TRUST ACT,1882. If the proposed beneficiary wishes to renounce his involvement in the trust, he will do so by writing a disclaimer to the trustee and providing notice.


SECTION 10 states that someone who is legally capable of contracting will possess property as a trustee.

No one, though, is obligated to recognize a trust. When a trustee is selected, he has the choice of accepting or rejecting the trust. He must express his approval by sentences, written, spoken, or deeds. The appointed trustee could even disclaim it, but only within a reasonable time frame. The land would not be transferred to the trustee because of his disclaimer. However, if there are more than one proposed trustee and one of them declines, the property will vest in the other trustee, who will then become the sole trustee. From the date of the trust’s formation, a prospective trustee who agrees becomes the trustee. When a person leaves property in trust for another in his will and the proposed trustees will show his will, it amounts to their approval of the trust.

Property becomes the focus of two types of possession under English law. The trustee is the legitimate owner, while the recipient is the beneficial owner.

The trustee has ownership of the property under Hindu law, according to the clause. Under Indian trust law, the recipient has some rights under the trust. Beneficial possession, also known as equal ownership, is not recognized in Indian trust law.


      There are various types of trust, which are listed further down:

  • Express trust is established when an individual is nominated to be the trustee of a trust that was created orally, in writing, or in an articulated word. If the land should be moved, it must first be registered and physically passed to the trustee.
  • Implied Trust– An implied trust is often established through the parties’ actions. It appears from the parties’ actions. The behaviour of one party induces suspicion and reveals the parties’ intentions.
  • Public and private trusts– Under Indian trust law, a public trust is one that is formed for the good of the general public. In general, the term “public” does not refer to the entire population. A confidence may be established for a portion of the public, and it will be valid as long as any member of a given class is allowed to benefit from it. Medical, educational, social care, schooling, and training are examples of general public purposes.

A private trust is established by a certain individual so that no one else will profit from it. A trust like this is enforceable only if the intended recipient takes private action.

  • Secret Trust– A secret trust is one in which neither the nature of the trust nor its conditions are revealed. It is a half-secret whether the nature of a trust is revealed but the terms of the trust are not. This is a misapplication of the principle of trust.


SECTION 6 of INDIAN TRUST ACT,1882 discusses the components of valid trust.

The act outlines how the creator will establish a trust, appoint trustees, and entrust his monetary assets to the trust. It may be explicit or oblique.

It contains:

  • The author’s intention to build confidence.
  • Purpose of creating the trust
  • The monetary commodity is allocated to the trustee’s advantage.
  • Gives the trustee ownership or transfers the trust property, which contains the author’s purpose.
  • The trustee will exclude his costs and compensation from the trust’s benefits.

The author must demonstrate the fair intention to establish a trust by words or actions, according to the trust statute.

The clause has the consequence of requiring four certainties for a true confidence:

  • certainty of the author’s purpose,
  • certainty of the item,
  • certainty of the recipient, and
  • certainty of the trust land.

SECTION 5 of the Indian Trust Act,1882 talks about the Nature of the property

Property that is passed to the trustee under this clause can be both moveable and immovable.

If the author of the trust and the guardian both sign the instrument, as well as the author of the trust’s will, that may be valid in the case of immovable property.

The provisions of Indian trust law cannot be used for the purpose of committing fraud. (R/W Section 4)

SECTION 4 of the INDIAN TRUST ACT,1882 states the Purpose to be lawful.

The trust becomes invalid if the object of the rule of trust is illegal.

However, if the trust property is found in another jurisdiction, the country’s rule will apply.

In India, trust law stipulates that the object must be legal.

Unless it is prohibited by statute, is fraudulent, or is of such a kind that, if allowed, will defeat the rule, the court considers it unethical or contrary to public policy.

Consider this example: a trust for dishonest creditors.


AVOIDS PROBATE: Although properties under your possession must go through probate to be checked and transferred according to your wishes, trust assets typically do not. A will becomes public record, while a trust arrangement remains confidential. When you have a trust during your lifetime, you just have to deal with your solicitor and guardian to put the arrangement into effect.

If you wish to keep your family’s financial affairs hidden from the public eye, privacy is important. Furthermore, since trusts skip the probate process, they are also a faster and easier way to distribute your estate after you pass away. You may also make a provision in your will that all properties kept outside of a pre-existing trust at the time of your death are transferred to the trust before you die. When it comes to the loss of a loved one – or the shifting of properties from one individual to another – you want the transition to be as smooth and discreet as possible. Developing a trusting relationship will assist you in achieving all of these objectives.

TAX MITIGATION: Trusts can be revocable or irrevocable, which means they can be changed once they’ve been established – or not. A revocable trust allows you to make modifications after you sign it, but depending on the terms, it may or may not result in tax benefits down the road.

An irrevocable trust, on the other hand, is one that you can’t normally undo until you’ve signed it – and creating it can help you save money on taxes by transferring funds out of your house. Over your lifespan, gifts to the trust are normally subject to gift tax provisions. Assets invested in this form of trust (and any appreciation on such assets over time) will, however, be exempt from estate tax following the death if such provisions are fulfilled.

In addition to the original funding, you can make an annual exclusion donation to an irrevocable trust each year without incurring any gift tax. Consult your solicitor and trust trustee to see if a revocable or irrevocable trust will be a suitable estate planning choice for you and your family.

TRUSTS SET OUT BASIC GUIDELINES FOR HOW THE ASSETS CAN BE USED: If you form a trust in your will or a different trust arrangement over your lifetime, trusts enable you to fully customize your estate plan. You may add limitations like age requirements or restrictions on how the funds can be used. For example, you might specify that the money in a trust be granted to your grandchildren only when they reach the age of 18, and that it only be used for college tuition. If a recipient needs additional assistance handling finances, you might set a cap to how much money they will get from the trust each year.

NOT ONLY IN THE EVENT OF DEATH, BUT EVEN IN THE EVENT OF SICKNESS OR INJURY, REVOCABLE TRUSTS MAY BE BENEFICIAL: Wills take place only when an individual dies, but a revocable trust set up over your lifespan will benefit your family if you become sick or unable to handle your estate. If this occurs, the trustee will make distributions, pay bills, and even file tax returns on your behalf. You should nominate someone to handle the properties (via the trust) ahead of time.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

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