Vacating Office of Trustees and Extinction of Trusts

Trust is created when someone authorises another person to take care of some property in beneficial interest of third party. An instrument of trust is created whereby all the terms and conditions are set forth and the person accepting the trust act as trustee in accordance to the instrument.

Indian Trust Act, 1882 (“Act”) governs the creation and other aspects of trust. It also specifies the events whereby office of trustee got vacated.

VACATION OF OFFICE

Chapter VII of the Act deals with the provision of vacation of office of Trustee.

Office of Trustee can be vacated in two cases:

  • By his death
  • By his discharge from his office

A trustee may be discharged from his office only as follows:

  • By extinction of Trust
  • By completion of his duties under Trust
  • By means mentioned in Trust
  • By appointment of new Trustee
  • By mutual consent of Trustee and Beneficiary
  • By order of court

Petition to be discharged from trust: Trustee may apply by petition to a principal Civil Court of original jurisdiction to be discharged from his office, Court if found reasonable may discharge the trustee form his duties.

Appointment of new trustees: New Trustee for the trust can be appointment in following cases:

  • Death of trustee
  • If trustee is absent from India for a continuous period of 6 months
  • Leaves India for residing abroad
  • Declared himself insolvent
  • Make application to court for discharge of duties
  • Become unfit of incapable to act as trustee

In all above said cases new Trustee can be appointed if nomination is given under Trust then through nomination

If nomination is not given and no person is willing to act as trustee then the author of trust if able to contract or surviving trustee or legal representative of last surviving trustee.

Whenever any new trustee is appointed all the trust-property for the time being vested in the surviving or continuing trustees or trustee, or in the legal representative of any trustee, shall become vested in such new trustee, either solely or jointly with the surviving or continuing trustees or trustee, as the case may require.

Every new trustee so appointed, and every trustee appointed by the court, shall have the same powers, authorities and discretions, and shall in all respects act, as if he had been originally nominated a trustee by the author of the trust.

On the death or discharge of one of several co-trustees, the trust survives, and the trust-property passes to the others, unless the instrument of trust expressly declares otherwise.

EXTINCTION OF TRUST

Extinction of trust means that the trust comes to an end , this situation will arise in following condition:

  • When the purpose of trust is fulfilled
    For example : Mr. A has created a Trust wherein Trustee has to manage the property till the time of Mr. A’s daughter (beneficiary) . After marriage of daughter the trust purpose is fulfilled, and it will come to end.
  • When the purpose becomes unlawful
  • When the trust being revocable, is expressly revoked

How trust can be Revoked?

A trust may be revoked at the will of the creator or it may be revoked:

  • Where all the beneficiaries are competent to contract : give consent for revocation
  • Where the trust has been declared by a non-testamentary instrument or by word of mouth: in exercise of a power of revocation expressly reserved to the author of the trust;
  • 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

For Example: A conveys property to B in trust to sell the same and pay out of the proceeds the claims of A’s creditors. A reserves no power of revocation. If no communication has been made to the creditors, A may revoke the trust. But if the creditors are parties to the arrangement, the trust cannot be revoked without their consent

No trust can be revoked by the author of the trust so as to defeat or prejudice what the trustees may have duly done in execution of the trust.

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