Rights and Powers of Trustee

Introduction

The Indian Trusts Act, 1882 gives trustees certain rights and powers to properly manage trust property. These rights protect the trustee, while the powers enable effective administration of the trust.

Meaning / Definition

Rights of a trustee are legal entitlements (benefits given by law) to perform duties without personal loss. Powers of a trustee are the legal authorities given to manage, protect, and deal with trust property.

Modes or Types

Rights of Trustee

Right to title deeds

• Trustee is entitled to possess:
  • Trust deed (document creating trust)
  • All title documents related to trust property

Right to reimbursement of expenses

• Trustee can recover expenses from trust property for:
  • Execution of trust
  • Protection of property
  • Benefit of beneficiaries
• If property is insufficient, trustee can recover from beneficiaries personally

Right to reimbursement of legal expenses

• Trustee can claim:
  • Advocate (lawyer) fees
  • Travel and management expenses

Right to indemnity from gainer by breach of trust

• A person who gains from breach of trust must compensate trustee
• Trustee has charge (right over property) against such person
• This right is lost if trustee himself commits fraud

Right to apply to court for opinion

• Trustee can approach court for guidance on management issues
• Court gives advice only on present matters (current issues)

Right to settlement of accounts

• After completing duties:
  • Trustee can get accounts verified
  • Can receive written discharge (release from liability) if nothing is due

Powers of Trustee

General powers of trustee

• Trustee can do all acts necessary for:
  • Protection of property
  • Benefit of trust
• Can lease property up to 21 years
• Longer lease requires court permission
• Can spend money for repairs and improvements

Statutory Powers of Trustee

Power to sell

• Trustee can sell property:
  • By auction or private contract
  • In whole or in parts
• Must follow trust deed instructions

Power to vary investment

• Trustee can:
  • Change investments
  • Reinvest in safe and profitable securities

Power regarding minor beneficiaries

• Trustee can use income for:
  • Maintenance (basic needs)
  • Education
  • Marriage or religious expenses
• If income is insufficient, corpus (main property) can be used with court permission

Power to give receipts

• Trustee can give written receipt for:
  • Money
  • Securities
  • Movable property
• Valid unless there is fraud

Power to compound (settle claims)

• Trustee can:
  • Settle debts
  • Accept compromise
  • Allow time for payment
  • Refer disputes to arbitration (decision by neutral person)
• Protected if acting in good faith

Vesting of powers

• If there are multiple trustees:
  • Remaining trustees can act if one dies
  • Unless trust deed states otherwise

Suspension of powers

• Trustee’s powers are suspended when:
  • Court takes control in a suit regarding execution of trust

Important Case Law

Official Trustee, West Bengal v. Sachindra Nath Chatterjee
The court held that under Section 34, courts can give guidance only on present management issues, not on future or hypothetical matters.

Practical Example

A trustee managing a trust property:

• Can sell land through auction if needed
• Can reinvest money in safer government securities
• Can approach court if unsure about a decision

If trustee spends money on repairs:

• He can recover it from trust property

Summary

• Trustee has rights to protect himself from personal loss
• Can recover expenses and seek court guidance
• Has powers to manage, sell, lease, and invest property
• Can act for benefit of minors and beneficiaries
• Must act in good faith to avoid liability
• Court supervision may suspend trustee powers in certain cases