RIGHTS , DUTIES AND POWERS

OF BENEFICIARIES

INTRODUCTION
The origin of 'Trusts' can be traced back to the ancient times when human
motivation to do charity and dedicate property for charitable and religious purposes
found its manifestation in the form of dharmashalas, annachatras, sadavarts,
educational and medical institutions, construction of water tanks and wells, bathing
ghats,implanting trees etc. with the emergence of idol worship, endowments for
temples and idols came into existence.In addition to public endowments/wakfs,
private trusts can also be formed for looking after the welfare,age,illness,disability or
any other reason.

A trust has been defined as an obligation annexed to the ownership of property

and arising out of confidence, and the person who accepts the confidence is called the
trustee. The obligation being annexed to the ownership of property it must vest in
the trustee, or at any rate he must have a right to call for a transfer of, or to possess
such property. Mere appointment of a person as a trustee without the vesting and
transfer of property would not constitute his title.
Section 9 of Indian Trust Act, 1882, defines Who may be beneficiary.
Disclaimer by beneficiary.-Every person capable of holding property may be a
beneficiary.
A proposed beneficiary may renounce his interest under the trust by disclaimer
addressed to the trustee, or by setting up, with notice of the trust, a claim inconsistent
therewith.
Indian Trusts Act 1882 deals with all the matters related to trusts, trustee and
beneficiaries .In trust law according to Section-9 of Indian Trust Act 1886 Every
person capable of holding property may be a beneficiary. A proposed beneficiary may
renounce his interest under the trust by disclaimer addressed to the trustee, or by
setting up, with notice of the trust, a claim inconsistent therewith.A beneficiary is the
person or persons who are entitled to the benefit of any trust arrangement. A
beneficiary will normally be a natural person, but it is perfectly possible to have a
company as the beneficiary of a trust, and this often happens in sophisticated
commercial transaction structures. With the exception of charitable trusts, and some
specific anomalous non-charitable purpose trusts, all trusts are required to have
ascertainable beneficiaries.
Generally speaking, there are no strictures as to who may be a beneficiary of
a trust; a beneficiary can be a minor, or under a mental disability (in fact many trusts
are created specifically for persons with those legal disadvantages). It is also possible

to have trusts for unborn children, although the trusts must vest within the applicable
perpetuity period.
A trust is a relationship whereby property (real or personal, tangible or
intangible) is held by one party for the benefit of another. A trust conventionally arises
when property is transferred by one party to be held by another party for the benefit of
a third party, although it is also possible for a legal owner to create a trust of property
without transferring it to anyone else, simply by declaring that the property will
henceforth be held for the benefit of the beneficiary. A trust is created by a settlor
(archaically known, in the context of trusts of land, as the feoffor to uses), who
transfers some or all of his property to a trustee (archaically known, in the context of
land, as the feoffee to uses), who holds that trust property (ortrust corpus) for the
benefit of the beneficiaries (archaically known as the cestui que use, or cestui que
trust). In the case of the self-declared trust, the settlor and trustee are the same person.
The trustee has legal title to the trust property, but the beneficiaries have equitable title
to the trust property (separation of control and ownership). The trustee owes a
fiduciary duty to the beneficiaries, who are the "beneficial" owners of the trust
property. (Note: A trustee may be either a natural person, or an artificial person (such
as a company or a public body), and there may be a single trustee or multiple cotrustees. There may be a single beneficiary or multiple beneficiaries. The settlor may
himself be a beneficiary.)
The Indian trust Act 1882, is an act to define and amend the law relating to
Private Trusts and Trustees. The trust can be and has been applied as a device for
accomplishing many different purposes As Maitland observes, of all exploits of
equity the largest and the most important is the invention and development of the
trust. According to him, the trust is an institute of great elasticity and generality; as
elastic, as general as contract.

WHAT IS A PRIVATE TRUST

A trust is called a Private Trust when it is constituted for the benefit of one or
more individuals who are, or within a given time may be, definitely ascertained.
Private Trusts are governed by the Indian Trusts Act 1882. A Private Trust may be
created inter vivos or by will. If a trust in created by will it shall be subject to the
provisions of Indian Succession Act, 1925.
The following are the requisites for creation of a Trust:
The existence of the author/settlor of the Trust or someone at whose instance
the Trust comes into existence and the settlor to make an unequivocal
declaration which is binding on him.
There must be a divesting of the ownership by the author of the trust in favour
of the trustee for the beneficial enjoyment by the beneficiary.
A Trust property.
The objects of the trust must be precise and clearly specified.
The beneficiary who may be particular person or persons.
Unless all the above requisites are fulfilled, a trust cannot be said to have come into
existence.
A trust can be created for any lawful purpose. [Section 4 of Indian Trusts Act,
1882] A trust can be created by deed, will or even word of mouth. However, trust of
immovable property can be created only by non-testamentary instrument signed by
author of trust and is registered, or by will of author. [Section 5] Thus, Will is not
required to be registered, even if it pertains to immovable property.

The main instrument of declaring a trust is the Trust Deed, which should be
made on non-judicial stamp papers of, prescribed fee and signed by the trustee or
trustees for submission to the Registrar concerned. In case of trust the registrar or subregistrar having authority to register properties has the authority to register the Trust
Deed.
Therefore, Trust Deed of the proposed Trust may be registered with Tahsildar,
or registrar properties and endowment at the district collectorate. In metropolitan
cities separate offices of registrar of properties and endowments do function.
The Trust Deed should contain name(s) of the author(s), settler(s) of the trust;
the name(s) of the trustee(s); the name(s) if any, of the beneficiary/ies or whether it
shall be public at large; name of the trust; address of the trust; objects of the trust;
procedure of appointment, removal or replacement of a trustee, their rights, duties and
powers, etc; the mode and method of determination of the trust etc.
DEFINITIONS OF TRUST
Lewin The word trust refers to the duty or aggregate accumulation of
obligations that rest upon a person described as trustee. The responsibilities are in
relation to property held by him, or under his control. That property he will be
compelled by a court in its equitable jurisdiction to administer in the manner lawfully
prescribed by the trust instrument, or where there be no specific provision written or
oral, or to the extent that such provision is invalid or lacking, in accordance with
equitable principles. As a consequence the administration will be in such a manner
that the consequential benefits and advantages accrue, not to the trustee, but to the
persons called cestui que trust, or beneficiaries, if there be any; if not, for some
purpose which the law will recognise and enforce. A trustee may be a beneficiary, in
which case advantages will accrue in his favour to the extent of his beneficial
interest.

Keeton All that can be said of a trust is that it is the relationship which arises
whenever a person called trustee is compelled in Equity to hold property, whether real
or personal, and whether by legal or equitable title, for the benefit of some persons (of
whom he may be one and who are termed as cestui que trust) or for some object
permitted by law, in such a way that the real benefit of the property accrues, not to the
trustees, but to the beneficiaries or other objects of the trust. The Hague Convention
on the Recognition of Trust For the purpose of this Convention, the term trust refers
to the legal relationship created- inter vivos or on death- by a person, the settlor, when
assets have been placed under the control of a trustee for the benefit of a beneficiary
or for a specified purpose
BENEFICIARIES
According to Sec 9 of Indian Trust Act 1886 Every person capable of holding
property may be a beneficiary. A proposed beneficiary may renounce his interest
under the trust by disclaimer addressed to the trustee, or by setting up, with notice of
the trust, a claim inconsistent therewith. Every private trust must have a designated
beneficiary or one so described that his identity can be learned when the trust is
created or within the time limit of the Rule of Perpetuity, which is usually measured
by the life of a person alive or conceived at the time the trust is created. This rule
varies from state to state, is designed to prevent a person from tying up property in a
trust for an unlimited number of years. A person or corporation legally capable of
taking and holding legal title to property can be a beneficiary of a trust. Partnerships
and unincorporated associations can also be beneficiaries. Unless restricted by law,
aliens can also be beneficiaries.
WHO CAN BE TERMED AS BENEFICIARIES
A class of persons can be named the beneficiary of a trust as long as the class
is definite or definitely ascertainable. If property is left in trust for "children," the class

is definite and the trust is valid. When a trust is designated for family," the validity of
the trust depends on whether the court construes the term to mean immediate family in
which case the class is definite or all relations. If the latter is meant, the trust will fail
because the class is indefinite. When an ascertainable class exists, a author may grant
the trustee the right to select beneficiaries from that class. However, a trust created for
the benefit of any person selected by the trustee is not enforceable.
If the author's designation of an individual beneficiary or a class of
beneficiaries is so vague or indefinite that the individual or group cannot be
determined with reasonable clarity, the trust will fail. The beneficiaries of a trust hold
their equitable interest as tenants in common unless the trust instrument provides that
they shall hold as joint tenants. For example, three beneficiaries each own an
undivided one-third of the equitable title in the trust property. If they take as tenants in
common, upon their deaths their heirs will inherit their proportionate shares. If,
however, the author specified in the trust document that they are to take as joint
tenants, then upon the death of one, the two beneficiaries will divide his share. Upon
the death of one of the remaining two, the lone survivor will enjoy the complete
benefits of the trust.
CATEGORIES OF THE BENEFICIARY OF A TRUST
There are two basic Trusts with regards to the exercises of the Beneficiaries' rights:
1. Beneficiaries of a Bare Trust (as known as a Simple Trust) is where the
Beneficiary is entitled to take actual ownership and control of the Trust and has the
right to the income and capital. The Trustees, in this case, act in accordance with the
Beneficiaries' wishes.
2. Beneficiaries of an Express Trust are Trusts where by the Trustee is given
additional duties and powers assigned in the Trust Deed. The Express Trust can be
either an Inter Vivos Trust, which is a Trust created during the life of the Grantor, or

the Express Trust can be a Testamentary Trust, which is a Trust enacted after the death
of the Grantor (as known as the Will Trust).
As far as Trust is concerned, there are two main types of Beneficiaries:
1. Fixed Beneficiaries who simply have a fixed entitlement to the income and capital
from the Grantor.
2. Discretionary Beneficiaries to whom the Trustees have discretionary and decisionmaking powers to the entitlements.
The Crown: According to the law of England the sovereign may be a cestui que trust,
and similarly in India the Government may be a beneficiary.
Unborn Child: An unborn child cannot be said to be a a person capable of holding
property within the meaning of this section and is therefore incapable of being a
beneficiary.
Corporation: In England a trust of lands cannot be limited to a corporation without a
license from the crown.But since the Mortmain Acts do not apply to India , a
corporation in India may be a censui que trust.
Alien: An alien also may be a cestui que trust.
Settler ad His wife: A trust was created for the benefit of the settler and his wife.
Subsequent to the trust the marriage was dissolved and the wife remarried. It was held
in that the wife forfeited the benefits under the trust.
NATURE OF BENEFICIARYS INTERESTS:
There is a controversy as to the nature of the equitable interest arising as the
result of the creation of a trust. Does it involve a right in rem (available against the

world at large, i.e. persons generally) or a right in personam (that is, against a specific
person)? There are basically three views regarding this issue:
(a) The traditional view- It suggests that the beneficiarys interest involves a right in
personam. Maitland argues that to hold a contrary view is to ignore the important rule
that an equitable interest does not prevail against a bona fide purchaser for value of
the legal estate without notice of the trust. See the case of Pilcher v Rawlins (1872),
where the court echoed the same sentiment.
(b) The realist view- It suggests that the right is in rem. Thus, a beneficiary who
follows trust property is a exercising a proprietary right allowing him to follow the
property into the hands of a trustee or any person receiving property from the trustee
other than by a purchaser for value without notice. See the case of Re Halletts Estate
(1880), where Jessel MR said: the moment you establish the fiduciary relation, the
modern rules of equity, as regards following trust property apply.
(c) The hybrid view- Hanbury argues that the equitable interest of the beneficiary
might be in the nature of a hybrid, partaking of both the right in personam and the
right in rem.
RIGHTS,DUTIES AND POWERS OF THE BENEFICIARIES
Sec 55. Rights to rents and profits.-The beneficiary has, subject to the provisions of
the instrument of trust, a right to the rents and profits of the trust-property.
Sec 56. Right to specific execution.-The beneficiary is entitled to have the intention
of the author of the trust specifically executed to the extent of the beneficiary's interest
Right to transfer of possession.
Right to transfer of possession.-and, where there is only one beneficiary and he is
competent to contract, or where there are several beneficiaries and they are competent

to contract and all of one mind, he or they may require the trustee to transfer the trustproperty to him or them, or to such person as he or they may direct.
When property has been transferred or bequeathed for the benefit of a married
woman, so that she shall not have power to deprive herself of her beneficial interest,
nothing in the second clause of this section applies to such property during her
marriage.
Illustrations
(a) Certain Government securities are given to trustees upon trust to accumulate the
interest until A attains the age of 24, and then to transfer the gross amount to him. A
on attaining majority may, as the person exclusively interested in the trust-property,
require the trustees to transfer it immediately to him.
(b) A bequeaths Rs. 10,000 to trustees upon trust to purchase an annuity for B, who
has attained his majority and is otherwise competent to contract. B may claim the Rs.
10,000.
(c) A transfers certain property to B and directs him to sell or invest it for the benefit
of C, who is competent to contract. C may elect to take the property in its original
character.
Sec 57. Right to inspect and take copies of instrument of trust, accounts, etc.-The
beneficiary has a right, as against the trustee and all persons claiming under him with
notice of the trust, to inspect and take copies of the instrument of trust, the documents
of title relating solely to the trust-property, the accounts of the trustproperty and the
vouchers (if any) by which they are supported, and the cases submitted and opinions
taken by the trustee for his guidance in the discharge of his duty.
Sec 58. Right to transfer beneficial interest.-The beneficiary, if competent to
contract, may transfer his interest, but subject to the law for the time being in force as

to the circumstances and extent in and to which he may dispose of such interest:
Provided that when property is transferred or bequeathed for the benefit of a married
woman, so that she shall not have power to deprive herself of her beneficial interest,
nothing in this section shall authorize her to transfer such interest during her marriage.
Sec 59. Right to sue for execution of trust.-Where no trustees are appointed or all
the trustees die, disclaim, or are discharged, or where for any other reason the
execution of a trust by the trustee is or becomes impracticable, the beneficiary may
institute a suit for the execution of the trust, and the trust shall, so far as may be
possible, be executed by the Court until the appointment of a trustee or new trustee.
Sec 60. Right to proper trustees.-The beneficiary has a right (subject to the
provisions of the instrument of trust) that the trustproperty shall be properly protected
and held and administered by proper persons and by a proper number of such persons.
Explanation I.--The following are not proper persons within the meaning of this
section:-- A person domiciled abroad: an alien enemy: a person having an interest
inconsistent with that of the beneficiary: a person in insolvent circumstances; and,
unless the personal law of the beneficiary allows otherwise, a married woman and a
minor.
Explanation II.--When the administration of the trust involves the receipt and
custody of money, the number of trustees should be two at least.
Illustrations
(a) A, one of several beneficiaries, proves that B, the trustee, has improperly disposed
of part of the trust-property, or that the property is in danger from B's being in
insolvent circumstances, or that he is incapacitated from acting as trustee. A may
obtain a receiver of the trust-property.

(b) A bequeaths certain jewels to B in trust for C. B dies during A's lifetime; then A
dies. C is entitled to have the property conveyed to a trustee for him.
(c) A conveys certain property to four trustees in trust for B. Three of the trustees die.
B may institute a suit to have three new trustees appointed in the place of the deceased
trustees.
(d) A conveys certain property to three trustees in trust for B. All the trustees disclaim.
B may institute a suit to have three trustees appointed in place of the trustees so
disclaiming.
(e) A, a trustee for B, refuses to act, or goes to reside permanently out of 1*[India] or
is declared an insolvent, or compounds with his creditors, or suffers a co-trustee to
commit a breach of trust. B may institute a suit to have A removed and a new trustee
appointed in his room.
Sec 61. Right to compel to any act of duty.-The beneficiary has a right that his
trustee shall be compelled to perform any particular act of his duty as such, and
restrained from committing any contemplated or probable breach of trust.
Illustrations
(a) A contracts with B to pay him monthly Rs. 100 for the benefit of C. B writes and
signs a letter declaring that he will hold in trust for C the money so to be paid. A fails
to pay the money in accordance with his contract. C may compel B on a proper
indemnity to allow C to sue on the contract in B's name.
(b) A is trustee of certain land, with a power to sell the same and pay the proceeds to B
and C equally. A is about to make an improvident sale of the land. B may sue on
behalf of himself and C for an injunction to restrain A from making the sale.

Sec 62. Wrongful purchase by trustee.-Where a trustee has wrongfully bought trustproperty, the beneficiary has a right to have the property declared subject to the trust
or retransferred by the trustee, if it remains in his hands unsold, or, if it has been
bought from him by any person with notice of the trust, by such person. But in such
case the beneficiary must repay the purchase-money paid by the trustee, with interest,
and such other expenses (if any) as he has properly incurred in the preservation of the
property; and the trustee or purchaser must (a) account for the nett profits of the
property, (b) be charged with an occupation-rent, if he has been in actual possession of
the property, and (c) allow the beneficiary to deduct a proportionate part of the
purchase-money if the property has been deteriorated by the acts or omissions of the
trustee or purchaser.
Nothing in this section-(a) impairs the rights of lessees and others who, before the institution of a suit to have
the property declared subject to the trust or retransferred, have contracted in good
faith with the trustee or purchaser; or
(b) entitles the beneficiary to have the property declared subject to the trust or
retransferred where he, being competent to contract, has himself, without coercion or
undue influence having been brought to bear on him, ratified the sale to the trustee
with full knowledge of the facts of the case and of his rights as against the trustee.
Sec 63. Following trust property--into the hands of third persons; into that into
which it has been converted.-Where trust-property comes into the hands of a third
person inconsistently with the trust, the beneficiary may require him to admit
formally, or may institute a suit for a declaration, that the property is comprised in the
trust.

Where the trustee has disposed of trust-property and the money or other property
which he has received therefor can be traced in his hands, or the hands of his legal
representative or legatee, the beneficiary has, in respect thereof, rights as nearly as
may be the same as his rights in respect of the original trust-property.
Illustrations
(a) A, a trustee for B of Rs. 10,000, wrongfully invests the Rs. 10,000 in the purchase
of certain land. B is entitled to the land.
(b) A, a trustee, wrongfully purchases land in his own name, partly with his own
money, partly with money subject to a trust for B. B is entitled to a charge on the land
for the amount of the trustmoney so misemployed.
Sec 64. Saving of rights of certain transferees.-Nothing in section 63 entitles the
beneficiary to any right in respect of property in the hands of-(a) a transferee in good faith for consideration without having notice of the trust,
either when the purchasemoney was paid, or when the conveyance was executed, or
(b) a transferee for consideration from such a transferee. A judgement-creditor of the
trustee attaching and purchasing trust-property is not a transferee for consideration
within the meaning of this section.
Nothing in section 63 applies to money, currency notes and negotiable instruments in
the hands of a bona fide holder to whom they have passed in circulation, or shall be
deemed to affect the Indian Contract Act, 1872 (9 of 1872), section 108, or the
liability of a person to whom a debt or charge is transferred.
Sec 65. Acquisition by trustee of trust-property wrongfully converted.-Where a
trustee wrongfully sells or otherwise transfers trust-property and afterwards himself
becomes the owner of the property, the property again becomes subject to the trust,

notwithstanding any want of notice on the part of intervening transferees in good faith
for consideration.
Sec 66. Right in case of blended property.-Where the trustee wrongfully mingles the
trust-property with his own, the beneficiary is entitled to a charge on the whole fund
for the amount due to him.
Sec 67. Wrongful employment by partner-trustee of trust-property for
partnership purposes.-If a partner, being a trustee, wrongfully employs trustproperty in the business or on the account of the partnership, no other partner is liable
therefor in his personal capacity to the beneficiaries unless he had notice of the breach
of trust. The partners having such notice are jointly and severally liable for the breach
of trust.
Illustrations
(a) A and B are partners. A dies, having bequeathed all his property to B in trust for Z,
and appointed B his sole executor. B, instead of winding up the affairs of the
partnership, retains all the assets in the business. Z may compel him, as partner, to
account for so much of the profits as are derived from A's share of the capital. B is
also answerable to Z for the improper employment of A's assets.
(b) A, a trader, bequeaths his property to B in trust for C, appoints B his sole executor,
and dies. B enters into partnership with X and Y in the same trade, and employs A's
assets in the partnershipbusiness. B gives an indemnity to X and Y against the claims
of C. Here X and Y are jointly liable with B to C as having knowingly become parties
to the breach of trust committed by B.
Sec 68. Liability of beneficiary joining in breach of trust.-Where one of several
beneficiaries-(a) joins in committing breach of trust, or

(b) knowingly obtains any advantage therefrom, without the consent of the other
beneficiaries, or
(c) becomes aware of a breach of trust committed or intended to be committed, and
either actually conceals it, or does not within a reasonable time take proper steps to
protect the interests of the other beneficiaries, or
(d) has deceived the trustee and thereby induced him to commit a breach of trust, the
other beneficiaries are entitled to have all his beneficial interest impounded as against
him and all who claim under him (otherwise than as transferees for consideration
without notice of the breach) until the loss caused by the breach has been
compensated.
When property has been transferred or bequeathed for the benefit of a married
woman, so that she shall not have power to deprive herself of her beneficial interest,
nothing in this section applies to such property during her marriage.
Sec 69. Rights and liabilities of beneficiary's transferee.-Every person to whom a
beneficiary transfers his interest has the rights, and is subject to the liabilities, of the
beneficiary in respect of such interest at the date of the transfer.
CONCLUSION
A trust structure comes with certain inherent advantages. A trust provides the
flexibility to be set up in more than one form or in hybrid forms as per the
requirement. A trust can be either private or public. As opposed to a public trust, a
private trust is a trust generally for the convenience and support of individuals of
families. Trust can be structured as revocable or irrevocable.
A revocable trust can enable the settlor to exercise control over the property but
can be prone to clubbing provisions under the tax laws. An irrevocable trust can
provide safeguard against future creditor claims on the assets in case of bankruptcy,

since the settlor ceases to have the title to the trust property, yet at the same time
enable indirect control over the property through terms of the trust deed. This is one
the prime benefits of a trust structure which allows ring fencing of wealth, the
downside, however, being the settlor losing ownership.
Except for necessary governing provisions, the trust law provides enough
flexibility in creating and managing a trust. Any person competent to contract can
create a trust and any person capable of holding property can be a beneficiary
including a minor. Any person capable of holding property can be a trustee. A trust
can be an efficient tool for succession planning without the need for probate process
through Court, thereby protecting privacy by preventing public disclosure. Thus the
rights , duties , and powers of the beneficiaries provides an important part under the
Indian Trust Act 1882.