A trust is an arrangement by which the property of the author of the trust or settlor is transferred to another, the trustee, for the benefit of a third person, the beneficiary. In general terms, trusts fall into one of two categories, private trusts and public trusts. The India Trusts Act, 1882 (act) governs private trusts. Public trusts are further classified into charitable and religious trusts, and the Charitable and Religious Trusts Act, 1920, (CRTA) the Religious Endowments Act, 1863, the Charitable Endowments Act, 1890, the Societies Registration Act, 1860 and the Bombay Public Trust Act, 1950 are the statutes most commonly relied upon to determine the recognition and enforceability of public trusts.

Charities are mentioned in schedule seven of the constitution and therefore both the central and state governments have jurisdiction. Statutes of the state in which the charity is registered therefore also apply. Public trusts set up and declared by means of a non-testamentary instrument, apart from any state-specific legislation are required to be registered under the Registration Act, 1908. While India has not ratified the Hague Trust Convention 1985, trust laws give due recognition to the principles in it regarding the characteristics, existence and validity of trusts. The act gives the author or settlor and the trustee wide powers to respectively establish and manage the affairs of the trust, particularly with regard to its property. This is provided that the trust is established for a lawful purpose and does not contravene the provisions of any other law. The Trust creator, sometimes known as the ‘Grantor’ or ‘Settlor’, is the person who started out as the owner of the property that is to be transferred to and held by the Trust.

The Trustee is the person or financial institution (such as a bank or a Trust company) who holds the legal title to the Trust estate. There may be one or more trustees. The trustee is obligated to act in accordance with the terms of the Trust for the benefit of the Trust beneficiaries.
The beneficiaries are the persons who the Trust creator intended to benefit from the Trust estate. The rights of the beneficiaries depend on the terms of the Trust. A person may set up a private trust under a written instrument; that is, either through a will (testamentary trust) or through a written trust deed during the person’s lifetime. A trust having immovable property and created through a non-testamentary instrument has to be declared through a registered written instrument (section 5 of the Indian Trusts Act 1882). India, being a common law jurisdiction, not only acknowledges the concept of trust, but also recognises trusts governed by other jurisdictions. Depending upon the need of the settlor or family various trust structures are prevalent which include discretionary, non-discretionary, revocable, irrevocable, specific, general, determination linked to happening of an event or non-occurrence of an event. In a private trust, one has to be conscious to address the rule against perpetuity as provided for by Indian laws, which imposes a time limit on the age of the trust.

A trust is a fiduciary relationship in which a trustor gives another party, known as the trustee, the right to hold title to property or assets for the benefit of a third party.

  • While they are generally associated with the idle rich, trusts are highly versatile instruments that can be used for various purposes to achieve specific goals.
  • Each trust falls into six broad categories—living or testamentary, funded or unfunded, revocable, or irrevocable.

Beneficiaries and trustees India does not recognize trust as a separate entity (except for tax purposes). A trust is identified as a legal obligation that is attached to the ownership of property arising out of a confidence placed by the settlor in the trustee for the benefit of the beneficiaries (as identified by the settlor), or the beneficiaries and the settlor. The trustee is the legal owner of such trust property, whereas the beneficiaries have beneficial interest in the trust property. Succession Planning through a Private Trust: Succession through a Private Trust mechanism is a common mode of transition of assets as the Trust provides better legal protection, certainty and flexibility. Also as a practice, it is an accepted mode of implementing succession planning. Trust is governed by Indian Trust Act, 1882 (“Trust Act”). Section 3 of Trust Act defines a “Trust” as 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.

 Thus, trust is a declaration which is made by the owner of the property that going forward, the same will be held by him or some other person (say a trustee), for the benefit of someone (ie beneficiary) and will be handed over to that person immediately or in due course.

Who can form a Trust

A Trust can be formed – By any person competent to contract –

  • above 18 years of age;
  • of sound mind;
  • not disqualified from entering into any contract by any law; or On behalf of a minor (only with the permission of a principal civil court of original jurisdiction).

Requisites to a Trust

  • Author of the Trust – someone at whose instance the trust comes into existence (also called as Settlor);
  •  Purpose to form a Trust – to divest the ownership of the Author/Settlor of the Trust in favour of the Beneficiary/Trustee;
  •  Trustee – every person capable of holding property can become a Trustee;
  •  Beneficiary – to whom the Trust income/corpus is intended for;
  • Subject matter of Trust – any asset capable of being transferred can be a subject matter of a trust.

All these requisites are required for a Trust to legally come into existence.

A Trust can be either:

Discretionary Trusts:

A discretionary trust is a trust that has been set up for the benefit of one or more beneficiaries, but the trustee is given full discretion as to when and what funds are given to the beneficiaries. The beneficiaries of the trust have no rights to the funds, nor are the funds regarded as part of the beneficiaries’ estates.

Non-discretionary Trusts:

A trust in which the trustee has no ability to make investment decisions with regard to the assets in the trust and/or has no control over when and how the assets are distributed to the beneficiary. In a non-discretionary trust, the trustee simply sees to it that the grantor’s wishes are carried out. Revocable Trust:  A trust that can be revoked (cancelled) by its settlor at any time during this life. Irrevocable Trust:  A trust will not come to an end until the term / purpose of the trust has been fulfilled. For succession planning, the Trust usually used is a Private (non-testamentary) Trust – be it specific or discretionary based on settlor’ swishes and is implemented during lifetime of the settlor.

Revocable Trust: 

 A trust that can be revoked (cancelled) by its settlor at any time during this life.

Irrevocable Trust: 

A trust will not come to an end until the term / purpose of the trust has been fulfilled. For succession planning, the Trust usually used is a Private (non-testamentary) Trust – be it specific or discretionary based on settlor’ swishes and is implemented during lifetime of the settlor.


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.


We do conduct several Courses, Quizs and Webinars, Click here to register

Do follow me on FacebookTwitter  Youtube and Instagram.

The copyright of this Article belongs exclusively to Ms. Aishwarya Sandeep. Reproduction of the same, without permission will amount to Copyright Infringement. Appropriate Legal Action under the Indian Laws will be taken.

If you would also like to contribute to my website, then do share your articles or poems at

In the year 2021, we wrote about 1000 Inspirational Women In India, in the year 2022, we would be featuring 5000 Start Up Stories

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Create a website or blog at

Up ↑

%d bloggers like this: