Kinds of Trust

Introduction

Trusts can be classified in different ways depending on their purpose, creation, duties of trustee, and consideration.
Understanding these types helps in identifying the nature and legal effect of a trust.
These classifications are important for exams and practical application.

Meaning / Definition

Kinds of trust refer to the different categories into which trusts are divided based on their characteristics such as purpose, mode of creation, duties, and legal structure.

Modes or Types

Based on Purpose

Private Trust

• Created for:
  • One person, or
  • A definite group of persons
• Example: Trust for children of a family

Public or Charitable Trust

• Created for:
  • Public at large or
  • Uncertain and changing group
• Example: Trust for education or public welfare

Based on Mode of Creation

Express Trust

• Created clearly by:
  • Words, or
  • Written document, or
  • Will

Executed Trust

• Fully completed trust
• No further action required
• Generally irrevocable (cannot be cancelled)

Executory Trust

• Requires further steps or documents
• Can be revoked before completion

Constructive Trust

• Created by law due to wrongful conduct
• Arises when a person misuses confidence
• Court forces him to hold property for benefit of another

Implied Trust

• Not expressly created
• Inferred from conduct and circumstances

Based on Duties of Trustee

Simple Trust

• Trustee has no active duties
• Only holds property for beneficiary

Special Trust

• Trustee has active duties
• Must exercise judgment or discretion

Based on Consideration

Trust for Value

• Created with consideration (something in return)
• Relationship is contractual

Voluntary Trust

• Created without consideration
• Based on free will of settlor

Based on Completeness of Constitution

Illusory Trust

• Appears to be a trust in form
• But lacks real intention to create trust

Trust of Imperfect Obligation

• Cannot be enforced by court
• Trustee may still carry it out voluntarily

Trust in Favour of Creditors

• Created to pay debts
• Becomes irrevocable once trust relationship is formed

Discretionary Trust

• Trustee has full discretion:
  • Whether to pay
  • How much to pay
• Beneficiary has only a hope, not a fixed right

Distinction / Comparison

Practical Example

A creates a trust for his children’s education.

• This is a private trust.

If A creates a trust for building a school open to all,

• It becomes a public trust.

If B misuses property given in confidence,

• Court may create a constructive trust to protect the affected person.

Summary

• Trusts are classified based on purpose, creation, duties, and consideration
• Private trusts benefit specific persons; public trusts benefit society
• Express trusts are clearly created; implied trusts arise from conduct
• Constructive trusts are imposed by courts to prevent misuse
• Simple trusts have no active duties; special trusts involve discretion
• Voluntary trusts require no consideration; trust for value involves consideration
• Discretionary trusts give power to trustees without fixed beneficiary rights