Qualifcation o a Trustee (section-10) Qualifcations o a Trustee: According to Section-10 of the Trust Act 1882 every person, who is legally capable of holding property may validly be a trustee So far as the age limit for a trustee is concerned the Section is silent about such provision
Can an Insolvent be a Trustee? !enerally spea"ing, Section-10 prescribes only one #uali$cation for trustee ie he must be capable to hold property property %onse#uently, a person who has been ad&udicated as an insolvent by a competent court cannot be appointed as a trustee because he is destitute of holding property
Can a Minor be a Trustee? 'n the light of Section-10 a minor can validly be appointed as a trustee, however, where the trust involves the e(ercise of discretion, a minor cannot e(ecute e(ecute the trust as he is not competent to contract 't means that a minor can validly be appointed as a trustee )owever, where the nature of the trust is such that the trustee would be re#uired re#uired to e(ercise e(ercise his discretion, a minor is destitute of becoming a trustee and conse#uently, his appointment as trustee would be invalid
Acceptance o a Trust by a ropose! Trustee (section-10) Mo!e o Acceptance: a) The Trust Trust Act 1882 1882 has not prescribed prescribed any speci$c made or words for the acceptance of a trust by a trustee
b) A trustee may consent to become trustee either e(pressly or impliedly Therefore a trustee may consent to be a trustee by any
words or acts which indicate his acceptance to be the trustee with reasonable certainty
Illustrations: a) A be#ueaths certain property to * and %, his e(ecutors, as trustees for +, * and % prove As will This is in itself an acceptance of the trust, and * and % hold the property in trust for +
b) A transfers certain property to * in trust to sell it and to pay out of the proceeds As debts * accepts the trust and sells the property So far as regards *, a trust of the proceeds is created for As creditors
c) A be#ueaths 100,000- rupees to * upon certain trusts and appoints him his e(ecutor * severs 100,000- rupees from the general assets and appropriates it to the speci$c purpose This is an acceptance of the trust
"isclai#er o a Trust by a ropose! Trustee (section-10) "isclai#er by a ropose! Trustees: 'f a person is proposed to be the trustee of a trust, it is not binding upon him to accept such proposal, conse#uently, he may or may not accept 'nstead of accepting a trust, an intended trustee may, within a reasonable period, disclaim the trust The disclaimer of the trustee shall prevent the trust-property from vesting in him
"isclai#er by one o #any Trustees: .here there are more than one trustees, the disclaimer by one or more of them vests the trust-property in the remaining trusteetrustee who have not disclaim the trust 'n such a case the trusteetrustees who have not disclaimed the trust shall be considered as the sole trusteetrustees from the date of the creation of the trust
(1)- Trustee$s "uty to %&ecute Trust-I ('ection-11) Trustees +uty to follow the
Instructions o te Autor: A trustee is under duty to ful$ll the purpose of the trust /or doing so he shall obey the directions of the author of the trust given at the time of its creation
Illustration: A*+ a trustee, is simply authoried to sell certain land by public auction )e cannot sell the land by private contract
Mo!ifcation o te "irections o te Autor o Trust ('ection-11) odi$cation of the +irections !iven by the Author of Trust •
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The directions of the author of trust may be modi$ed by the consent of all the bene$ciaries being competent to contract .here the bene$ciary is incompetent to contract, his consent may be given by a principal %ivil %ourt of original &urisdiction on his behalf
3A4, a trustee of certain land for 354, 364 and 374, is authoried to sell the land to 3*4 for a speci$ed sum 354, 364 and 374, being competent to contract, consent that A may sell the land to % for a less sum 3A4 may sell the land accordingly
"irections o te Autor ,ic are I#practicable+ Illeal o In.urious to te /enefciaries ('ection-11) A trustee is not bound to obey any direction when to doing so would be impracticable, illegal or manifestly in&urious to the bene$ciaries 3A4, a trustee for 3*4 and her children, is directed by the author of the trust to lend, on *s re#uest, trust-property to 3*4s husband, 3%4, on the security of
his bond % becomes insolvent and 3*4 re#uests 3A4 to ma"e the loan 3A4 may refuse to ma"e it
()- "uty o Trustee to Inor# i#sel o te 'tate o Trust roperty ('ection-1) A trustee is bound to ac#uaint himself, as soon as possible, with the nature and circumstances of the trust-property9 )e is also bound to obtain, where necessary, a transfer of the trust-property to himself9 and Sub&ect to the provisions of the instrument of trust, to ta"e bac" the trustmoneys invested on insu:cient or ris"y securities
Illustrations: a) The trust-property is a debt outstanding on personal security The 'nstrument of trust gives the trustee no discretionary power to leave the debt so outstanding The trustees duty is to recover the debt without unnecessary delay
b) The trust-property is money in the hands of one of two co-trustees ;o discretionary power is given by the instrument of trust The other cotrustee must not allow the former to retain the money for a longer period than the circumstances of the case re#uired
()- Trustee$s "uty to rotect Title to Trust roperty ('ection-1) A trustee is bound to maintain and defend all such suits $led against him concerning the trust property9 and A trustee is also bound to ta"e steps which are reasonably re#uired for the preservation of the trust-property and the assertion or protection of the title thereto
Illustrations: The trust-property is immovable property, which has been given to the author of the trust by an unregistered instrument Sub&ect to the provisions of the
(2)- Trustee$s "isability to set up Title to te Trust roperty ,ic is A!verse to te Interest o te /enefciary ('ection-12) A trustee is forbidden by law to set up either for himself or for any other person any title to the trust property which is in con>ict with the interest of the bene$ciaries of such trust
Illustration: Although a trustee is the legal owner of the trust property, however, he is in no case allowed to use the trust property for his bene$t or to sell or gift it to another as all these transactions would be adverse to the interest of the bene$ciaries of the trust
(3)- Te 'tan!ar! o Care 4e5uire! ro# a Trustee rear!in te Trust roperty-I ('ection-13) A trustee is bound to deal with the trust property as carefully as a man of ordinary prudence would deal with such property if it were his own9 'n the absence of a contract to the contrary, a trustee who has been dealing with the trust property as carefully as a man of ordinary prudence is not responsible for the loss, destruction or deterioration of the trust property
Illustrations:
a) 3A4, who lives in ?ahore is a trustee for 3*4, who lives in @arachi 3A4 remits trust funds to 3*4 by bills drawn by a person of undoubted credit in favour of the trustee as such, and payable at @arachi The bills are dishonoured 3A4 is not bound to ma"e good the loss
b) 3A4, a trustee of leasehold property, directs the tenant to pay the rents on account of the trust to a ban"er, 3*4, then in credit The rents are accordingly paid to 3*4, and 3A4 leaves the money with 3*4 only till wanted *efore the money is drawn out, 3*4 becomes insolvent 3A4, having had no reason to believe that 3*4 was in insolvent circumstances, is not bound to ma"e good the loss
c) 3A4, a trustee directed to sell the trust-property by auction, sells the same, but does not advertise the sale and otherwise fails in reasonable diligence in inviting competition 3A4 is bound to ma"e good the loss caused thereby to the bene$ciary
!) 3A4, a trustee for 3*4, in e(ecution of his trust, sells the trust-property, but from want of due diligence on his part fails to receive part of the purchase money A is bound to ma"e good the loss thereby caused to 3*4
e) 3A4, a trustee for 3*4, allows the trust to be e(ecuted solely by his cotrustee, 3%4 The co-trustee 3%4 misapplies the trust-property 3A4 is personally answerable for the loss resulting to 3*4
(6)- "uty o Trustee ,en te Trust roperty is a erisable roperty ('ection-16) .here the trust is created for the bene$t of several persons in succession, and the trust-property is of a wasting nature or a future or reversionary interest, the trustee is bound, unless an intention to the contrary may be inferred from the instrument of trust, to convert the property into property of a permanent and immediately pro$table character
Illustrations: a) A be#ueaths to * all his property in trust for % during his life, and on his death for + and on +s death for As property consists of three leasehold houses, and there is nothing in As will to show that he intended the houses to be en&oyed in specie * should sell the houses, and invest the proceeds in accordance with section 20
b) A be#ueaths to * his three leasehold houses in Buetta and all the furniture therein in trust for % during his life, and on his death for + and on +s death for )ere an intention that the houses and furniture should be en&oyed in specie appears clearly, and * should not sell them
(7)- Trustee$s "uty to be I#partial 'ection-17 .here there are more bene$ciaries than one, the trustee is bound to be impartial, and must not e(ecute the trust for the advantage of one at the e(pense of another .here the trustee has a discretionary power, the %ourt cannot prevent the trustee to e(ercise his discretion provided he has e(ercised his discretion reasonably and in good faith
Illustration 3A4, a trustee for 3*4, 3%4 and 3+4, is empowered to choose between several speci$ed modes of investing the trust-property 3A4 in good faith chooses one of those modes The %ourt will not interfere, although the result of the choice may be to vary the relative rights of 3*4, 3%4 and 3+4
(8)- Trustee$s "uty to revent 9aste o Trust roperty ('ection-18) .here the trust is created for the bene$t of several persons in succession and one of them is in possession of the trust property, if he commits, or
threatens to commit, any act which is destructive or permanently in&urious thereto, the trustee is bound to ta"e measures to prevent such act
Illustration: A leaves a mango orchard for * during his life and after his death to % 'f * wanted to cut the trees so that the wheat is cultivated the trustee is bound not to allow him
()- Trustee$s "uty to Maintain Accounts o te Trust roperty ('ection-1) ;eepin Accounts o Trust roperty: 't is one of the foremost duties of a trustee to "eep clear and accurate accounts of the trust-property, and9
To
10- 'ale by Trustee "irecte! to 'ell ,itin 'pecife! Ti#e (section) .here a trustee, directed to sell within a speci$ed time e(tends such time, the burden of proving, as between himself and the bene$ciary, that the latter is not pre&udiced by the e(tension lies upon the trustee, unless the e(tension has been authoried by a principal %ivil %ourt of original &urisdiction
Illustration A be#ueaths property to *, directing him with all convenient speed and within $ve years to sell it, and apply the proceeds for the bene$t of % 'n the e(ercise of reasonable discretion, * postpones the sale for si( years The sale
is not thereby rendered invalid, but %, alleging that he has been in&ured by the postponement, institutes a suit against * to obtain compensation 'n such suit the burden of proving that % has not been in&ured lies on *
11- Te =iability o a Trustee or /reac o Trust ('ection-6) .here the trustee commits a breach of trust, he is liable to ma"e good the loss which the trust-property or the bene$ciary has thereby sustained9 'n the following cases the trustee will not be liable to compensate the loss of the bene$ciary sustained by him because breach of trust on the hand of the trustee
a) .here the bene$ciary, has by fraud induced the trustee to commit the breach9 or
b) the bene$ciary, being competent to contract, has himself, without coercion or undue in>uence having been brought to bear on him, concurred in the breach, or subse#uently ac#uiesced therein, with full "nowledge of facts of the case and of his rights as against the trustee
1- A Trustee$s =iability or is pre!ecessor$s "eault ('ection-3) 'n case .here a new trustee is appointed in result of either death or resignation of a trustee, the newly appointed trustee will not be liable for the acts or defaults of his predecessor trust 'f his predecessor trustee had committed breach of trust and thereby had cause loss to the trustee, the bene$ciary can sue his legal heirs for such loss
1- A Trustee$s =iability or is Co-Trustee$s "eault ('ection-6) A trustee is not liable for a breach of trust committed by his co-trustee )owever, he can be held liable in the following cases
a) .here he has delivered trust-property to his co-trustee without seeing to its proper application9
b) .here he allows his co-trustee to receive trust-property and fails to ma"e due in#uiry as to the co-trustees dealings therewith, or allows him to retain it longer than the circumstances of the case reasonably re#uire9
c) .here he becomes aware of a breach of trust committed or intended by his co-trustee, and either actively conceals it or does not within a reasonable time ta"e proper steps to protect the bene$ciarys interest
>oinin in receipt or conor#ity: A co-trustee who &oins in signing a receipt for trust-property and proves that he has not received the same is not answerable, by reason of such signature only, for loss or misapplication of the property by his co-trustee
Illustration A be#ueaths certain property to * and %, and directs them to sell it and invest the proceeds for the bene$t of + *, and % accordingly sell the property, and the purchase-money is received by * and retained in his hands % pays no attention to the matter for two years and then calls on * to ma"e the investment * is unable to do so, becomes insolvent, and the purchase-money is lost % may be compelled to ma"e good the amount
12- 'everal =iability o Co-Trustees ('ection-7) 'everal =iabilities o Co-Trustee: .here co-trustees &ointly commit a breach of trust, or where one of them by his neglect enables the other to commit a breach of trust, each is liable to the bene$ciary for the whole of the loss occasioned by such breach
't means that the bene$ciary would be at liberty to $le suit against all or any one of the trustee for the compensation of his loss
Contribution as bet,een Co-Trustees: .here the aggrieved bene$ciary recovers the loss from only one of them, the trustee who pays oC the loss would be able to compel his co trustees to contribute the loss to e(tent of the assets he has received
