The Legal Framework for trustee in a trust

Indian Trusts Act 1882 deals with all the matters related to trusts, trustee and beneficiaries.
According to section 10 of Indian Trusts Act 1882 states that Every Person capable of
holding property may be a trustee; but, where the trust involves the exercise of discretion, he
cannot execute it unless he is competent to contract.
The position of trustee is an extremely important one, as trustees are in a "fiduciary"
relationship with the trusts beneficiaries. This means that they are in a special position of
trust and accordingly have a number of significant duties. If you are a trustee, it is vital that
you familiarise yourself with those duties, as you can be liable for "breach of trust" if you do
not full fill them. Any person who can own property may be a trustee. A minor (someone
under 20) can be a trustee, but a court would have to appoint someone to act as trustee until
the minor turns 20.
In general, the main duties of trustees are:
# to act in the best interests of the beneficiaries of the trust
# to act in an even-handed manner between beneficiaries and between groups of beneficiaries
# not to use knowledge or influence gained as a result of being a trustee to advance the
trustees own position (except when the trustee discloses his or her personal interest to the
settler of the trust and obtains # the settlers informed consent)
# to act personally rather than delegating decisions to others (except if the trust document
explicitly permits delegation)
# to act honestly and with the level of skill and care that would be expected of the reasonable
businessperson in administering the affairs of others
# to be thoroughly familiar with the terms of the trust in the trust deed (the main trust
document), and with who the possible beneficiaries may be and what the assets and liabilities
of the trust.
Appointment of the trustee
Appointment of the trustee should be done formally, expressly in writing, even though it will
always be implied the individual will use the trust property, or performs any act to carry out

the trust for the interest of beneficiaries. Once the acceptance has been tendered then no
court of law can prevent the trustee from holding the office, except for the breach of trust or
good cause dependent upon clear and lawful necessity.
The question who should be appointed trustee to some extent depends upon the nature of the
trusts ,whether it was regarded as a hereditary trust or whether the trusteeship of each holder
ends with him or it is the case of fresh appointment by court or some other competent
authority In Kinloch v. Secretary of the State for India James L.J. observed that The
Government of India is not ,as it appears to me , capable of being a trustee ; nor is the
Secretary of State in Council (the name by which the government can be sued) a person is
capable of being trustee any more than the attorney-general in this country would be ,or any
other person ,who sued in cases for ,or on behalf of the Crown. But the present view is that
the Secretary of State for India is capable of being, a trustee.
Anyone capable of taking physical possession of or legal title of the property can be a trustee.
And there is no limit to the number of trustees to hold the position in one trust. Generally
there are more than one trustee , the trustees, with respect to each other, are referred to as cotrustees, and when acting jointly as a collective body are referred to as the Board of Trustees.
The trustee should be at least someone capable and fit for executing the powers and duties
honorably.
The trustee should be stationed within the jurisdiction of the court where the trust is located.
But where the trust property is portable land, the trustee need not be stationed within any
single jurisdiction. Non residency will not disqualify or preclude the trustee from carrying out
his position; non-residents of the state in which the trust is to be administered can be trustees.
State law determines whether an alien can act as a trustee.
Who can be a trustee
A corporation can act as a trustee. A corporation is capable of accepting the ownership of
property with an obligation annexed to the ownership for the benefit of another which may be
a class of persons; there can be no objection to a corporation acting as a trustee. This is a
well-established proposition from the time of the decision of the Judicial Committee of the
House of Lords in Salomon v. Salomon and Company Ltd which has been followed in
India by the Supreme Court and it has held that a juristic person can carry on all human
activities subject to such limitation as arise from its not being a natural person and the

limitations imposed upon it activities by its own charter contained in the objects clause in the
memorandum of association. A juristic person cannot marry and procreate, but it is certainly
capable of owning property. It is also capable of owning property in its capacity as a trustee.
Corporations carrying on the activity of becoming trustees and executors are not unknown.
There can, therefore, be no objection to a corporation acting as a trustee provided its objects
clause in the memorandum of association so permits. For example, a trust company is a bank
that has been named by author of trust to act as trustee in managing a trust. A partnership can
serve as a trustee if state law permits. An unincorporated association, such as a Labor Union
or Social club, usually cannot serve as a trustee.
The Rights and power of trustee
CHAPTER IV : OF THE RIGHTS AND POWERS OF TRUSTEES

31.

Right to title-deed

32.

Right to re imbursement of expenses

33.

Right to indemnity from gainer by breach of trust

34.

Right to apply to Court for opinion in management of trust-property

35.

Right to settlement of accounts

36.

General authority of trustee

37.

Power to sell in lots, and either by public auction or private contract

38.

Power to sell under special conditions. Power to buy-in- and resell

39.

Power to convey

40.

Power to vary investments

41.

Power to apply property of minors, etc., for their maintenance, etc.

42.

Power to give receipts

43.

Power to compound, etc.

44.

Power to several trustees of whom one disclaims or dies

45.

Suspension of trustee's powers by decree

Two Important case laws related to legal framework of trustee in a trust

1) Kalandar Batcha Sahib v. Jailani Saib1
2) Khursaidi Begum v. Secretary of State2
1 AIR 1930 Mad 554.
2 5 Pat 539