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Creation of Trust - Indian Trusts Act 1882 (LAW)

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( Author )
16 November 2009

According to section 3 of the Indian Trusts Act 1882, 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. The person who reposes or declares the confidence is called the ‘author of the trust’; the person who accepts the confidence is called the ‘trustee’ and the person for whose benefit the confidence is accepted is called the ‘beneficiary’. According to section 4 of the Indian Trusts Act 1882, a trust may be created for any lawful purpose.

Two types of trusts can be created –
(i) Trust of immoveable property
(ii) Trust of moveable property

Trust of immoveable property

A trust of immoveable property may be created upon satisfying following conditions:
- Declared by a non-testamentary instrument in writing signed by the author of the trust indicating with reasonable certainty by any words an intention on his part to create thereby a trust, the purpose of the trust, the beneficiary and the trust property, and transfers the trust-property to the trustee and the instrument should also signed by the trustee, and registered, or
- By the will of the author of the trust or of the trustee indicating with reasonable certainty by any words an intention on his part to create thereby a trust, the purpose of the trust, the beneficiary and the trust property.

Trust of moveable property

A trust of moveable property may be created upon satisfying following conditions:
- Declared by a non-testamentary instrument in writing signed by the author of the trust indicating with reasonable certainty by any words an intention on his part to create thereby a trust, the purpose of the trust, the beneficiary and the trust property and the instrument should also be signed by the trustee, and
- By transferring the ownership of the property to the trustee.

The important difference in creation of trust of immoveable property and trust of moveable property is that the former requires the instrument to be registered unless it is created by the will of the author and in the later there is no condition to be registered and however proper proof for transferring the ownership of the property to the trustee is required.

Do you agree or have different opinion? Please guide.

Thanks.


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