Kinds of Trust under Indian Trust Act

Kinds of Trust under Indian Trust Act

This Act is called as the Indian Trust Act,1882.

Definition of Trust –

As per India Trust Act,1882, trust means an obligation annexed to the ownership of property and arising out of a confidence reposed in and accepted by the owner for the benefit of another and owner.

  • The subject matter of trust is called as Trust Property and Trust Monetary.
  • Objective Of Trust Should be “Lawful”-
  • The necessity of creating a Trust should be always a ‘ Lawful’ purpose .
  • It is lawful or not defined under Section 4 of Indian Trust Act, 1882.

• The Section 4 of the Indian Trust Act, 1882, defines “Lawful Trust” which means only the trust which are ‘Lawful’ will allowed and are not contrary to law.
• It should not be fraudulent in nature. It should not harm or injure any person or property of another.
• It should not be immoral or against the public property.

Parties in Trust –

There are basically three parties involve in trust. They are as following –
• Author/ Settlor / trustor/Donor- The person who wants to transfer his property and reposes confidence on another for the creation of the trust
• Trustee- The person who accepts the confidence for the creation if the trust.
• Beneficiary- The person who will benefit from the trust in the near future.

Who can make Trust?

A trust can be created by every person who is capable of contract .

And if a trust is created for the benefit of minor then the permission of Principal Civil Court of original jurisdiction is needed. The  following persons can apply for Trust-
• Trust of an undivided Hindu family
• Trust from a minor
• Trust by a woman
• The persons association
• Company

Right of the Trustees

• Right to title-deed
• Right to reimbursement of expenses
• Right to be recouped for erroneous over-payment
• Right to indemnity from gainer by breach of trust
• Right to apply to court for opinion in management of trust property
• Right of settlement of accounts.

How a trust is extinguished – A trust is extinguished in following manner :-

• When it’s purpose is completely fulfilled.
• When it’s purpose becomes unlawful.
• When the fulfillment of its purpose becomes impossible by –
Destruction of trust-property or when the trust is expressly revoked.

Types of Trust under Indian Trust Act,1882

1. Public Trust

The trust which is created for the Public or for the benefit of one class . The public trust are classified into two categories charitable and religious trust. But it also includes the –
• Scientific purposes
• Educational purposes
As compare to other trust public trust is known to majority of the people’s because its creation is simple and easy to manage . It is also permanent in nature .

2. Private Trust

A fund is called a Private Trust if it is for the benefit of one or more persons or within a specified period, which may be available. Financially Trusted Trustees are governed by the Indian Trust Act, 1882. Private Trust may be established between Vivos or wills.

Benefits of Private Trust-

• Effective and efficient mode of managing and passing of family assets. For example – Father can create a private trust in the name of son for passing assets.
• In creation of Trust, court does not oversee the process unlike at the time of execution of will. Executing a will is the technical term for signing will and making it legally binding. The will is filed with a petition, asking the court to approve the bill and put it into effect. The person named as the executor in the will is in charge of moving the will through the probate process and doing all work of managing and distributing the assets.
• Safeguards interest of family members including maintenance of members with special needs.
• Avoids family disputes.
• Under trust, conditions can be attached such as attainment of particular age/ fulfilment of authors wishes.

Types of Private Trust

Revocable Trust– It’s an alternative to will. It does not protect an assets as they can be withdrawn from this trust. In this, assets are neither considered given away; hence they are taxed in the hands of Settlor at the slab rate.
Irrevocable Non-Discretionary Trust– Assets cannot be withdrawn here. Settler has complete control over trust norms he can decide which beneficiary receives which asset, and in what proportion. If the settlor is the primary beneficiary, he she is attached at slab rate. For example- The Settlor may grant 50% of the trust’s benefits to 2nd child. Or the trust may be established for handicapped child to ensure that he or she is properly cared for if the child’s parents or guardians die.
Irrevocable Discretionary Trust– In this case, Settlor let’s the trustee decide which beneficiary gets which asset and in what proportion. The Settlor only decides beneficiaries. In other words ,while the beneficiaries are identified,their beneficial interest in the trust is not ascertained upfront. A well drafted discretionary trust allows the trustee to add or exclude beneficiaries from the class, the trustee greater flexibility to address changes in circumstances. The beneficiaries cannot come till the trustee to use any of the trust property for their advantage.

3.Public-cum-Private Trusts –

The Amalgamation of public trust and private trust is known as public come private trust. The proportion of the profit may be used for public purpose as well as for the private persons or individuals. Such trust shall be eligible for exemption in respect of the proportion of income on by private individuals or persons and private trust and shall be eligible for exemption in respect of the proportion of income received for public purpose .

4.Secret Trust

A trust is created where property is given to person with an absolutely or a pond and indefinite trust but there has been an understanding given by him or an understanding between him and the donor , that it shall be applied for the benefit of some other person object .


The Indian Trust Act,1882 generally include two types of trust public trust and private trust . But trust may be classified into different forms. There is a myth only people with high class of the the society can create trust but this isn’t correct . It can be created by any person whether they are ordinary man or woman.

Author: Kajal Bind,
Prayag Vidhi Mahavidyalaya (Allahabad State University),2nd year

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