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Definition of trust:
Blacks Law Dictionary defines the term trust as:
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 (the trustee) at
the request of another (the settlor) for the benefit of a third
party (the beneficiary).1
Law of trust in Pakistan:
Interpretation clause:
Section 3 of the Trust act 1882, defines in its interpretation clause the
definitions of trust, author of trust, trustee, beneficiary, trust property,
1 BRYAN A. GARNER, EDITOR IN CHIEF, BLACKS LAW DICTIONARY (USA: WEST
PUBLISHING CO. 9th Edition)
beneficial interest, instrument of trust and breach of trust along with few
other terminologies. Some of the definitions are reiterated below.
author of creator of
trust
the trust
creation
creation of
of
trust
trust
instrument
instrument
of
of trust
trust
trust
trust
property
property //
trust
trust
money
money
trustee
benificia
ry
administrator of
the trust
property
for whose
benefit trust is
created
1. Trust:
A trust is an obligation annexed to the ownership of property, and
rising 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.
2. Author of the trust :
The person who reposes or declares the confidence is called the
author of the trust.
3. Trustee:
The person who accepts the confidence is called the trustee of the
trust.
4. Beneficiary:
The person whose benefit the confidence is accepted is called the
beneficiary of the trust.
5. Trust property/ money:
The subject-matter of the trust is called trust-property or trustmoney.
8. Breach of trust:
A breach of any duty imposed on a trustee, as such, by any law for the
time being in force, is called a breach of trust.
AUTHOR
OF THE
TRUST
(ABSOLUTE
OWNER)
transfers his
legal title
personal
obligations in
respect of trust
property, works
for benificiery's
TRUST
interest
EE
(LEGAL
OWNER,
CONDITIONAL
RIGHT)
BENEFICI
ARY
(EQUITABLE
TITLE)
for whose
benifit trust is
created
1. Lawful purpose:
A trust can only be created for any lawful purpose.
2. When the purpose is considered to be unlawful
The purpose of a trust would be considered as unlawful under the
following situations:
(a) When it is forbidden by law,
(b)When it is of such a nature that, if permitted, it would defeat the
provisions of any law,
(c) When it is fraudulent,
(d)When it involves or implies injury to the person or property of
another,
(e) When the Court regards it as immoral or opposed to public policy.
3. Status of unlawful trust
Every trust of which the purpose is unlawful is void.
4. If trust is created for more than one purposes
Where a trust is created for two purposes, of which one is lawful and
the other unlawful and the two purposes cannot be separated, the
whole trust is void.
c) The beneficiary,
d) The trust-property,
e) Transfers the trust-property to the trustee except where the trust is
declared by will or the author of the trust is himself to be the trustee
declaration
of
declaration of
trust (intention
trust
(intention of
of
the
author of
the
the author
of the
trust)
trust)
transfer
transfer of
of the
the
trust
property to
trust property
to
the
trustee
the trustee
trust
property
trust property
(should be in
existence)
purpose
of the
the
purpose of
trust
be
trust (must
(must be
lawful)
lawful)
benificiary
benificiary
(someone
for
(someone for
whose
whose benifit
benifit
trust is created)
Section 10 of the Trust Act, defines the capacity of the trustee, according
the which, every person capable of holding property may be a trustee but
where the trust involves the exercise of discretion, he cannot execute it
unless he is competent to contract. No one is bound to accept a trust.
As mentioned in article 3 of the Act the trustee is a person who accepts
the confidence reposed by the author of the trust. Similarly article 10
defines that no one is bound to accept a trust. The intended trustee may
instead of accepting the trust, disclaim it within a reasonable period and
his disclaimer will prevent the trust-property from vesting in him.
In case of acceptance of the trust by the trustee he may accept the trust
by any words or acts indicating with reasonable certainty his acceptance.
to
the
trust-property,
may
be
reasonably
requisite
for
the
the securities
thereon, he is liable to
a. Section
25
of
Trust
Act
provides
Non-liability
for
direction
on
any
present
questions
respecting
the
sectio
n 31
of act
sectio
n 32
of act
sectio
n 33
of act
sectio
n 34
of act
sectio
n 35
of act
sectio
n 36
of act
All acts which are reasonable and proper for the realization,
protection or benefit of the trust-property,
after
acceptance
trustee
who
has
ii.
iii.
iv.
the
beneficiary,
being
competent
to
contract,
d.
e.
f.
trust-property
permission
purchase,
shall
or
not
mortgage
any
be
or
party
given
lease
thereof;
unless
is
and
the
manifestly
such
proposed
for
the
M
C
I
T
N
F
O
R
S
U
D
H
E
A
G
OF
T
O
MF
R
T
E
H
IC
AE
N
U
R
O
I F
T
S
N
ON
T
OH
D
E
TE
F
AT
H
US
R
T
TE
DR
T
IC
S
U
NT
F
O
RG
A
H
E
E
F R
M
O
F H
IC
ES
Discharge of trustee
According to the section 71 of the Trust Act, 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; THE TRUST ACT
1882
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
being
competent to contract; or
f. By the Court to which a petition for his discharge is presented
under this Act.
Procedure for discharge:
Section 72 of the Act provides the procedure for the trustee to discharge
from his office. According to which every trustee may apply by petition to
a principal Civil Court of original jurisdiction to be discharged from his
office; and, if the Court finds that there is sufficient reason for such
discharge, it may discharge him accordingly, and direct his costs to be
paid out of the trust-property. But where there is no such reason, the
Court shall not discharge him, unless a proper person can be found to take
his place.
extinguishes.
a. When its purpose is completely fulfilled; or
b. When its purpose becomes unlawful; or
c.
ii.
iii.
Where the trust is for the payment of the debts of the author
of the trust, and has not been communicated to the creditors
at the pleasure of the author of the trust.