A trust is a fiduciary arrangement in which the trustor, or first party, grants the trustee the authority to hold title to property or assets for the benefit of the beneficiary, or second party. Trusts are created to ensure that the assets of the trustor are legally protected, to ensure that the assets are transferred in accordance with the trustor’s desires, to save time, decrease paperwork, and, in some situations, to avoid or minimise inheritance or estate taxes. A trust in finance can also be a specific kind of closed-end fund established as a public limited company.Before knowing about trust owned property, we will study about some key words related to trust owned property which are as follows:-

There are three parties in a trust: 

1)Trustor:A Trustor is a person who creates or establishes trust, who is often either an individual or a married couple. A grantor or settlor are other names for a trustor. 

2)Trustee: A person or group of people named in a trust agreement to hold and oversee the trust’s assets is known to be a trustee.

3)Beneficiary: The individual or organisation for whom the trust was created, typically the trustor, a child or other relative, or a charitable organisation. More than one beneficiary is possible and frequently occurs. 

In a trust, the trustor transfers assets to the trust for the trustee to hold and manage on behalf of the beneficiaries. The trust agreement specifies the rules that the trustee must follow.

4)Trust Agreement:A trust agreement is a legal document that generally implies the set of rules or regulation intended by the trustor who is the owner of the properties or assets which shall be held in trust by the trustee for the benefit of the trustor’s beneficiaries.The trustee is supposed to follow the rules and regulations according to the trust agreement.

Section 3 of Indian Trust Act,1882 explains Trust as a  legal commitment attached to the owner of the property which results out of confidence  and resulting 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:

Trustor or author of the trust is explained by the Indian Trust Act as the person who reposes or declares the confidence is called the author of the trust or the trustor.

Trustee as explained by The Indian Trust Act,1882 is the person who accepts the confidence is called the trustee.

Beneficiary as explained by the said act is the individual for whose benefit the confidence is accepted.

5)Trust Owned Property

The “trust property” or “trust money” is what the trust is made out of.Generally,”trust property” is the subject matter of the trust as said by section 3 of Indian Trust Act,1882.All assets that the grantor or trustor, the person who established the trust, transferred into it while they were still alive or for whom the trust became the beneficiary after passing their constitute trust property. Real estate as well as personal property, including both tangible (such as a home or car) and intangible (such as stock or other financial interests) assets, can be included in a trust.


Private Trust

Public Trusts 

Discretionary Trusts

Non-discretionary Trusts

Revocable Trust

Irrevocable Trust

1)Private Trust-A private trust is established for the benefit of one or more people who can be positively identified today or in the near future. A private trust is one that is created for close friends, family members, or other individuals.The establishment of a private trust gives this transaction legal structure and ensures that funds are exclusively utilised for the benefit of the trustee’s family and in the manner the trustee specifies.

The Supreme court has distinguished a private from a public trust in Devakinandan V Muralidhar (1957) and

Ram Swarup Dasji V Sahi 1959.

The Supreme Court noted in Deoki Nandan v. Murlidhar held that: When property is set aside for a family idol’s worship, it is a private endowment rather than a public one since only members of the family—a predetermined group of people—are permitted to worship at the deity’s temple.

Another case law on breach of trust can be discussed below.

In case of any breach of trust, the trustee is bound to compensate for the loss. But a trustee is not liable for the loss if it is done by his co-trustee and if he had taken due care and diligence on his part.

Case Law:Mohan lall seal and ors v.Kanak Lall Seal

In this case, it was laid down that though the act only applies to private trust, besides this it also lays down principles that will be equally applicable to both public and private trust.

2)Public Trust-A public trust is a trust whose beneficiaries are all members of society and which performs charity acts such as providing aid to the needy, funding for education and healthcare, and other services that are beneficial to all members of society. The whole public is meant to benefit from the public charity trust, and no private persons or organisations should stand to gain personally from it. Additionally, it must serve the general population, regardless of caste, creed, or religion.

3)Discretionary Trust-A Discretionary Trust is set up for the benefit of a beneficiary or beneficiaries, but for which the Trustee is given full discretion. The Trustee decides when and how much funds are distributed to the beneficiaries. In turn, the beneficiaries have no rights to the funds held in the Trusts. Further, the funds held in the Trust are excluded from the beneficiaries’ estates.

4)Non-Discretionary Trust-A non-discretionary trust, often referred to as a fixed interest trust, is a trust in which the trustee is bound by the distribution guidelines outlined in the trust document and has no discretion over how distributions are to be made to the beneficiaries.

5)Revocable Trust-A revocable trust, also known as a revocable living trust, is a trust that the grantor (the person who creates the trust) may modify or alter at any time while he or she is still alive. A revocable trust is a legal document that places the grantor’s assets into a trust during his or her lifetime and then distributes them to his or her heirs or beneficiaries after his or her passing. While still alive, the grantor has the right to modify or revoke the trust.

6)Irrevocable Trust-In an irrevocable trust, once the trust deed is executed and put into force, the grantor cannot alter, modify, terminate, or change the terms of the trust. Once an asset has been given to a trust, it cannot be taken back. As a result, the grantor is unable to govern the asset.


Three qualities stand out: 

i) The responsibility results from the ownership of property passing to a person known as the “trustee.” 

ii) The obligation results from faith that the owner has placed and acknowledged. 

iii) The duty is to use the asset—also known as the trust asset—for the benefit of the “beneficiary” (called ces qui trust). 

Consequently, the three components that make up a trust are the trustee, the assets held in trust, and the beneficiary. 

The following requirements must be met for a trust to be considered valid: Formalities for transferring the property must be followed 

i)The purpose  for transfer of trust property must be lawful, section 4 ii) Formalities for a valid transfer must be followed, Section 5. iii) The confidence must be established with a certain degree of assurance, Section 6 iv) The trust’s creator must have the legal capacity to enter into contracts, Section.7 v) The beneficiary needs to be able to handle the possessions. vii) Trust assets must be movable. vii) The trustee has to consent to the trust. 

Proper definitions of the essentials

a)Legal intent 

A trust may be established for any legal reason; if not, it is invalid. The entire trust is null and void if the objects are jumbled up, one is legitimate and the other is unlawful, and they are not separable. 

A trust’s objective isn’t legitimate if: 

i) it’s illegal. 

ii) is of a character that, if allowed, would negate any legal requirement. 

iii) It is dishonest. 

iv) It entails or implies harm to another individual’s person or property.

v) If the court deems it to be unethical or against public policy. 

Illustration-A transfers his property to B in trust for a duration that exceeds the perpetuity rule. Trust is not valid. 

b)Formalities: If the trust’s assets are tangible goods, they must be set down in writing, have the trust creator’s signature, and be officially registered. It might be established by a will, in which case signing up is optional. 

A declaration must be made to vest the trust’s moveable property in the trustee, and ownership must be transferred to the trustee with instructions to hold the trust. 

c)Fair Certainty: The trust’s creator must make a reasonable amount of assurance known through words or deeds.i) His desire to build trust. ii)the trust’s objective; iii)the beneficiary; iv) the trust property; and v)the transfer of the property to the trust. 

For instance, A leaves his property to B in the hopes that he will support his family and settle A’s debts. This is merely a requirement; it is not a trust. 

d)Author Competency: The trust’s creator must possess legal competence. However, a trust may be established by or on behalf of a minor with the court’s approval.  

e) Trust Property-Any property that can be transferred to the recipient qualifies as trust property. This is dependent on Transfer of Property Act section 6.

f)The Beneficiary must be able to hold the property legally. The recipient is not required to use the trust. By notifying the trustee, he may abandon his interest. 

g) Trust acceptance: Anybody who is legally capable may serve as a trustee. He’s not required to acknowledge the trust. He may consent outright or inferentially. 


On ending note we can describe “Trust”as a egal arrangement between two parties wherein one, the trustee or fiduciary, has the authority to manage property and the other, the beneficiary, has the privilege of profiting from that property. Trusts are utilised in many different situations, although they are most frequently used in family disputes and charitable donations. The usual prerequisites for a trust are a named beneficiary and trustee, a specific asset (which serves as the trust’s principal), and the delivery of the asset to the trustee with the intention of establishing a trust. Trusts are frequently established in order to receive favourable tax treatment (including exemption). In contrast to most trusts, a charitable trust can last indefinitely and does not need to have specific beneficiaries. 


  • 4.

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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