What is trust & trust definition in law & process,limits - tradecareer

        TRUST - What is trust & trust definition in law & process,limits

A Trust is a relationship in which a person or entity holds a valid legal title to a certain property which is known as the Trust property.

 The Trust is bound by a fiduciary duty to exercise that legal title for the benefit of any one or more individuals or group of individuals or organisations, who are known as the Beneficiaries.

 The Trust shall be governed by the terms of the Written Trust agreement also called as Trust Deed.

Trust is defined in section 3 of the Indian Trust Act, 1882 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. 

In other words, it is simply a transfer of property by one person (the settlor) to another 

(the “trustee”) who manages that property for the benefit of someone else (the 

“beneficiary”). The settlor must legally transfer ownership of the assets to the trustee of 

the trust.

                                                                           

Author of Trust

The person who reposes or declares the confidence is called the "author of the trust".

Trustee

The person who accepts the confidence is called the "trustee".

Beneficiary

The person for whose benefit the confidence is accepted is called the "beneficiary”.

Trust Property

The property which is bestowed on to the trustee , to be utilized or hold for the benefit 

of the Beneficiary.

Types of Trusts

The trust have been broadly classified as

1. Public Trust

2. Private Trust

Public Trust

When Trust is constituted wholly or mainly for the benefit of Public at large, in other 

words beneficiaries in the Public trust constitute a body which is incapable of 

ascertainment. The Public trusts are essentially charitable or religious trusts and are 

governed by the general Law. The provisions of Indian Trusts Act do not apply on Public 

Trusts.

The Charitable and Religious Trust Act, 1920, the Religious Endowments Act, 1863, the 

Charitable Endowments Act, 1890, the Societies Registration Act, 1860, and the Bombay 

Public Trust Act, 1950 are the relevant legislations for the recognition and enforceability 

of public trusts. Moreover, in recent times, trusts can also be used as a vehicle for 

investments, such as mutual funds and venture capital funds. These trusts are governed by 

Securities and Exchange Board of India (SEBI)

Private Trusts

A trust is called a Private Trust when it is constituted for the benefit of one or more 

individuals who are, or within a given time may be, definitely ascertained. Private 

Trusts are governed by the Indian Trusts Act.

                                                                                

‘Public Trust V/s ‘Private Trust’

The criterion for deciding, whether a particular trust is of private nature or not, is 

whether the said trust is for the benefit of certain individuals or not. Where the 

intention of the founder was that the property was to be dedicated for the benefit of 

idols, the trust is undoubtedly of a public nature and not for the benefit of the individual 

members of family. 

The essential difference between a private and a public trust is that in the former the 

beneficiaries are definite and ascertained individuals or individuals who within definite 

time can be definitely ascertained but in the latter the beneficial interest must bevested in an uncertain and fluctuating body of persons either the public at large or some 

considerable portion of it answering a particular description

Persons who can create a Trust

a. Any competent Person.

b. Company.

c. Trust by a woman.

d. Association of Persons (AOP).

e. Hindu Undivided Family.

f. By or on behalf of minor with the permission of civil court.

Persons who can be a Trustee (Sec 10)

Any person who is capable of holding property may be a trustee.