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Law Dictionary Home Dictionary Definition trust

Trust, is a comprehensive expression, as covering not only the relationship of trustee and beneficiary but also that a bailor and bailee master and servant pledger and pledgee, guardian and ward and all other relations which postulate the existence of fiduciary relationship between the complainant and the accused, State v. K.P. Jain, (1983) 2 Crimes 947 (All). Trust, is a trust for public purposes, the substances and primary intention of the creator must be seen, Shabbir Husain v. Ashiq Husain, AIR 1929 Oudh 225. Trust, is an obligation annexed to ownership. A trustee holds property 'subject' to an obligation, which the testator has imposed upon him, Mahadeo Ramchandra v. Damodar Vishwanath, AIR 1957 Bom 218: (1957) 59 Bom LR 478. Means any arrangement whereby property is transferred with intention that it be administered for another's benefit is a trust. It casts an obligation on the trustee to use the property for achieving the purpose for which the trust is created, Baba Jamuna Das Mahanth v. Prescribed Authority, Urban Land Ceiling, Gorakhpur, AIR 1984 All 357. Means the right, enforceable solely in equity, to the beneficial enjoyment of property to which another person holds the legal title; a property interest held by one person (trustee) at the request of another (the settlor) for the benefit of a third party (the beneficiary), Black's Law Dictionary, 7th Edn., p. 1513. A trust is simply a confidence, reposed either ex-pressly or impliedly in a person (hence called the trustee), for the benefit of another (hence called the cestui que trust, or beneficiary), not, however, issuing out of real or personal property, but as a collateral incident accompanying it, annexed in privity to (i.e., commensurate with) the interest in such property, and also to the person touching such interest, for the accomplishment of which confidence the cestui que trust or beneficiary has his remedy in equity only; the trustee himself likewise being aided and protected in the proper performance of his trust when he seeks the Court's direction as to its management. Every kind of property in which a legal interest may be given, whatever may be its quantity or quality, may be impressed with a trust, which equity will carry out without regard to form, provided its purpose do not contravene the policy of the law, or the principles governing the rights of property: for qui h'ret in litera h'ret in cortice. Trusts may be classed thus:- (I.) Express, or defined by words; divided into- (a) Trusts executed, perfect, complete, or constituted. (b) Trusts executory, imperfect, incomplete, or directory. (II.) Arising by operation of law, such as (a) Constructive, which arise when property which has been acquired in right of another is being retained by the trustee for his own benefit, or when the person obtaining the same knows or should know that another person has a prior right to the property or some part or interest in it in equity. (b) Implied trusts which arise under similar con-ditions, out of some special relationship between the parties by contract or otherwise. (c) Resulting trusts, when the whole or any part of the property or part or interest in it is granted without any indication that it or such part or interest was intended for the benefit of the grantee or any person other than the grantor himself. See CONSIDERATION (last paragraph). Trusts are also divisible into: (1) permanent, when there is a continuing duty to be performed for the benefit of several persons in succession: and (2) temporary, when there is one particular duty only to perform. Again, trusts may be passive or active. A trust being, in contemplation of equity, the substantial ownership of or control over property, the person having the ownership or power can create a trust in favour of another person or in his own favour [Law of Property Act, 1925, s. 72 (3), as to conveyance] in relation there to co-extensive with his ability to dispose of it at law. The (English) Statute of Frauds, 29 Car. 2, c. 3, s. 7 [reproduced by s. 53 (1) (b) of the Law of Property Act, 1925], requires that 'all declarations or creations of trusts or confidences of any lands, tenements, or hereditaments shall be manifested and proved by some writing, signed by the party who is by law enabled to declare such trust, or by his will, or else they shall be utterly void and of none effect.' This provision does not affect the relation or operation of resulting, implied or constructive trusts, and does not include declarations of trust affecting chattels personal, which may be created by parol, provided they are to take effect during the life of their creator. Since it is not necessary that a trust be declared in writing, but only so manifested and proved, no form is requisite either as regards the nature of the instrument or the language; the statute will be satisfied if the trust can be established by any subsequent acknowledgment of the trustee, however informally or indirectly made, as by a letter under his hand, by his statement of defence in an action, or by a recital in a deed, provided it relate to the subject-matter, and the precise nature and object of the trust can be ascertained. a trust cannot be engrafted upon a will unless by a testamentary or codicillary paper executed with the statutory formalities, but if a devise or bequest of the legal estate be accompanied with any mala fides in the devisee or legatee, as if there be an express or implied undertaking to execute the intent of making a provision for third persons, the Court will certainly establish such a trust. A trust may be declared either directly or indirectly: To create a trust by a direct or formal declaration, a person need only make his meaning clear as to the interest he intends to give, having regard as a rule to the technical terms of the Common or Statutory Law in the limitations of legal estate. Before 1926 an equitable entail would in the case of an executory document or a bequest or devise by will pass without the words 'heirs of the body' or 'in tail'; in the case of an executed document, apt words of limitation were necessary [see Re Moncton's Settlement, (1913) 2 Ch 636; and Re Arden, Short v. Cam, (1935) 1 Ch 326]. See now the L.P.Act, 1925, s. 60, by which, after 1925 the fee-simple or other interest which the grantor had power to con-vey will pass without words of limitation unless a contrary intention appears in the conveyance, but as regards the creation of equitable interests corres-ponding to an estate-tail in either realty or per-sonalty (see s. 130 of that Act), s. 130 (2) assimilates informal limitations in tail in executory instru-ments or wills to limitations of personalty, and s. 130 (1), which apparently directs that limitations in tail (without any reservation or qualification for the case of executory instruments or wills) must follow the precise form of legal limitations formerly necessary for the creation of such estates by deed (not being an executory instrument). A precatory trust is properly a trust declared by a person by inference and not imperatively, and construed by the Court in favour of the intention. Thus when property is given absolutely to any person, and he is recommended, or entreated, or wished, by the donor having power to command, to dispose of such property in favour of another, the recommendation, entreaty, or wish creates a trust, provided the words are so used that upon the whole they ought to be construed as imperative; and also provided that the subject of the recommendation or wish, as well as the objects or persons intended to have the benefit of such recommendation or wish, be certain and definite. There is not any inclination to extend the rule of construction, which gives an imperative effect to precatory or recommendatory words. Where, from the different parts of the instrument, it appears that the words re expressive of a mere expectation or wish, no trust will arise; as where the words are, that the donee will be kind to or remember, certain objects or classes, or the like; or where the donor uses such expressions as, 'trusting to the justice of his successors,' and it is to be inferred that it is their own sense of justice on which he relies. When the testator recommends, but adds that he does not absolutely enjoin, it is clear that the expressions are to be taken as prectory only, and not imperative. If it appear from the context that the first taker ws intended to have a discretionary power to withdraw the whole or any part of the subject from the objects of the wish or request, or if there are any words by which it is expressed or from which it can be implied, that the first taker may apply any part of the subject to his own use, it will not be held that a trust is created. In recommendatory trusts, if the words for any reason do not amount to a trust, or the intended trust fail in the whole or in part, the absolute interest remains in the donee; or if the trust established do not exhaust the property given, the donee retains, in virtue of the gift, so much of the property as is not affected with the trust; but if property be given to a person as trustee only, if no trust be declared, or the trust declared or purporting to be declared should fail, then there is a resulting trust for the donor or those claiming under him, and the donee can claim nothing beneficially, nothing being given to him but as trustee. Any person may be appointed a trustee except an infant [(English) L.P. Act, 1925, s. 19], person of unsound mind or convicted of felony, or bankrupt or a corporation which has been dissolved (see Trustee Act, 1925, s. 36). As to the discretion of the Court, see s. 41 (ibid.) and notes to the ss. in Wolst. and Ch. Conveyancing Statutes, Vol. II. Formerly an alien could not be a trustee of realty; but see now ALIEN. A corporation may be constituted a trustee of personalty, and also of realty upon charitable trusts; but not upon private trusts, by reason of the Statutes of Mortmain, unless the trustee is a Trust Corporation or the Public Trustee (see those titles). Equity will, however, supply a trustee where realty is devised to a corporation which is not capable of holding land as a trustee. It was formerly never advisable to select a married woman to be a trustee, on account of her inability to join in the requisite assurances without her husband's concurrence; but this difficulty has been removed by modern statutes; see especially (English) Married Women's Property Act, 1907, s. 1, replaced by the (English) Law of Property Act, 1925, s. 170. Nor should an infant be appointed a trustee, on account of his legal disability. If a trust involve the receipt and custody of money, the safeguard of at lest two trustees ought rarely to be dispensed with, and in the case of receipts after 1925 of capital money by trustees for sale of land or upon sale by tenants for life or statutory owners of settled land, the receipt must be by two trustees or a trust corporation (see (English) Law of Property Act, 1925, and (English) Settled Land Act, 1925). A personal representative selling for the purpose of administration can give a valid receipt [(English) Law of Property Act, 1925, s. 27 (2), and (English) Administration of Estates Act, 1925, s. 39], but during a minority or if there is a life interest upon an intestacy or administration of a will, administration will only be granted to two individuals. [see Judicature Act, 1925, s. 160 (1)] On the death of a sole trustee, or the last of several trustees, the legal estate vests in his personal representative as if it were a chattel real [(English) Conveyancing Act, 1881, s. 30], replaced by Administration of Estates Act, 1925, s. 1. A trust will be enforced wherever there is a valuable consideration; but, if it be merely voluntary, the equitable interest will not be enforced, unless an actual trust be created, and no act remains to be done to complete the title of the trustees, for then a consideration is not essential. An agreement founded on a meritorious consideration (i.e., a secondary valuable consideration, as in favour of a wife or children) will not be executed as against the settlor himself, but as between parties claiming under the settlor, if the Court can act in favour of the meritorious consideration without inflicting a hardship on persons peculiarly entitled to protection, the voluntary agreement will in such a case be specifically executed, and see (English) Law of Property Act, 1925, s. 172 (3). The rule is to carry into effect the object proposed by the trust, unless it is in contravention of the public policy of the law, as, for instance, seeking to create a perpetuity, or accumulating annual income be-yond the statutory limits. By the (English) Trustee Act, 1888 (51 & 52 Vict. c. 59), s. 8, a trustee may under certain circumstances plead the Statute of Limitations in answer to a claim against him for a breach of trust: see Re Somerset, (1894) 1 Ch 231; Howe v. Earl Winterton, (1896) 2 Ch 626. See LIMITATIONS. The (English) Judicial Trustees Act, 1896 (59 & 60 Vict. c. 35), provides for the appointment of remunerated 'judicial trustees' by the court on the application of either trustee or beneficiary. See JUDICIAL TRUSTEE. By the (English) Judicature Act, 1873, s. 34, the execution of trusts, charitable or private, is assigned to the Chancery Division of the High Court of Justice. For the special provisions made for the execution of trusts during the war with Germany, see the (English) Execution of Trusts (War Facilities) Act, 1914 and 1915. The (English) Trustee Act, 1925, replaced and con-solidated the various Trustee Acts and other statutes which regulated and guided the conduct of trustees in the administration of their trusts, with the exception of the unrepealed s. 8 of the (English) Trustee Act, 1888, by which trustees, as a general rule, are allowed [see Re Somerset, (1894) 1 Ch 231; Howe v. Earl Winterton, (1896) 2 Ch 626], except in case of fraud or retention of trust property, to plead the Statutes of Limitation. Part I. of the Trustee Act, 1925, ss. 1 to 11, relates to the investments which trustees are allowed to make with trust funds if no directions are given by the grantor or settlor or in addition to and subject to such directions. This part is important from a practical point of view because trustees are liable to make good any loss on unauthorised investments in the absence of any relief provided by the Act'see ss. 4, 8, 61 (power of Court to relieve a trustee from liability for breach of trust), reproducing s. 3 (1) of the (English) Judicial Trustees Act, 1896 (59 & 60 Vict. c. 35), and s. 62 (breach instigated by the cestui que trust). Part II. relates to the powers of trustees; Part III., appointment and discharge of trustees; Part IV., powers of the Court, appointment of new trustees (q.v.) and vesting and other orders (s. 57 gives power to he Court to authorize an extension of the trustees' powers, but this does not extend to trustees for the purposes of the Settled Land Act, 1925); and Part V., general provisions. In Scotland, see Trust (Scotland) Act, 1921. 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. [Indian Trusts Act, 1882 (2 of 1882), s. 3]

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