Trust of Immovable and Movable Property & Appointment of Trustees

Introduction

The validity of a trust depends not only on intention but also on proper transfer of property. Section 5 of the Indian Trusts Act, 1882 lays down rules for creating trusts over immovable and movable property. The Act also provides rules for appointment and replacement of trustees.

Meaning / Definition

A valid trust requires transfer of property to a trustee in a legally recognized manner. The method of transfer depends on whether the property is immovable (land, building) or movable (money, goods).

Modes or Types

Trust of Immovable Property

• A trust of immovable property must be:

  • Declared by a written instrument (document)
  • Signed by the author (creator) of the trust or trustee
  • Registered under law

• A trust can also be created through a will (testamentary document):

  • Must be in writing
  • Signed by the testator (person making the will)
  • Attested (signed) by two witnesses
  • Registration is not compulsory

• Under Mohammedan law:

  • A trust may be oral or written
  • Signature and attestation are not mandatory

Trust of Movable Property

• A trust of movable property can be created:
  • In the same way as immovable property (written and registered), OR
  • By simple transfer of ownership of the property to the trustee

Appointment of Trustees

General Rule

• A trustee is a person who holds and manages trust property.
• Any person capable of holding property can be a trustee.

Important Principles

• A trust does not fail due to absence of a trustee
  (Principle: Equity never wants a trustee – meaning law ensures a trustee is available)

• Trustee must:

  • Accept the role voluntarily
  • Not resign without consent of beneficiaries or court

Situations for Appointment of New Trustee (Section 73)

A new trustee may be appointed when:

• Trustee dies
• Trustee becomes unfit
• Trustee leaves India or is absent for 6 months
• Trustee refuses to act

In such cases:

• Property temporarily goes to settlor or legal representatives
• They hold it until a new trustee is appointed

Who Can Appoint a Trustee

• Person named in trust deed
• Author of trust (if alive and competent)
• Surviving trustees
• Legal representative of last trustee
• Court (if required)

Appointment by Court (Section 74)

Court may appoint trustee when:

• There is vacancy
• Beneficiary applies to court

Court considers:

• Wishes of author of trust
• Wishes of authorized appointing person
• Proper execution of trust
• Interest of beneficiaries

Important Case Law

Re Tempest (Justice Turner L.J.)
The court laid down that while appointing trustees, the court must consider:

• Wishes of the author
• Proper execution of trust
• Interest of beneficiaries

Practical Example

A creates a trust of his land:

• If he writes and registers a document transferring land to B as trustee → valid trust
• If he simply says it orally → invalid for immovable property

For movable property:

• A gives ₹5 lakhs to B to hold for C → valid trust even without written document

If B dies:

• Court or other authorized persons appoint a new trustee

Summary

• Trust of immovable property must be written, signed, and registered
• Trust can also be created by will (no registration needed)
• Movable property trust can be created by transfer of ownership
• A trust does not fail due to absence of trustee
• Trustees can be appointed by settlor, existing trustees, or court
• Court considers intention, execution, and beneficiary interest while appointing trustee
• Law ensures continuity of trust even if trustee dies or refuses to act