Procedure to Dissolve a Private Trust

Introduction

Trust is defined in the Indian Trusts Act, 1882 as a responsibility attached to the ownership of a property which is maintained for the benefit of another. Property is transfer by one person to another who manages it for the interest of the beneficiary. Therefore, there are three parties involve, ‘settlor’ or the person who creates the trust, ‘trustee’, or the person whose duty it is to use the property for benefit of another, and the ‘beneficiary’ or the person for whose benefit the trust is. An organization or association of persons can also be appointed as a trustee and every person who is capable of holding a property including a human, corporation, or even a state, can be made a beneficiary.

There are two broad categories of trusts that can be create for the beneficiary- Private trusts and Public trusts. In a private trust, definite and ascertain individuals are beneficiaries as oppose to public trust. Wherein the beneficiary can be uncertain as the trust can be for a large number of people. Private trusts are govern by the Indian Trusts Act, which does not affect any rules of Muhammadan law or mutual relations in a HUF and does not apply to public/private religious or charitable organizations or to trusts made to distribute prizes of war among the captors.

Making of a Trust

For the successful creation of a private trust, it must be for a lawful purpose. It can be created by an individual who has attained 18 years of age and is of sound mind. If the trust is for a minor, his guardian or the trustee himself will be responsible for the maintenance of the minor. A trust can also be create by a minor. But, only after the principal Civil court of original jurisdiction approves of it.

The intention of the settlor while creating a trust must be made clear and should be unambiguous. It should be transfer to the trustee in a written form or by will. For trust created in immovable property; it is valid only if it is register and declare in writing by a non-testamentary instrument; also, it has to be signed. For a movable property, the transfer of property must be to create the trust.

Procedure to Dissolve Private Trust

Various provisions for the dissolving of a private trust are give under the Indian Trusts Act. A private trust cannot go on forever; it has to come to an end. A private trust can be dissolve under the following circumstances:

• The purpose of the trust becomes unlawful: A trust can only be create for a lawful purpose. The purpose is consider to be lawful if it is not against the provisions of any law. It does not cause injury to anybody; and is not for a fraudulent purpose and should not be immoral or against public policy. If a trust has been create for more than one purpose. Only one of them is lawful while others are unlawful. The trust as a whole will be unlawful and become void. Hence, the trust can be dissolve at any time its purpose becomes unlawful.
• Fulfillment of purpose: Every trust is for a certain purpose and once the purpose is satisfy or fulfilled. The trust can be dissolve.
• Use of trust property: If the trust was create for a particular purpose and the property assign is not use for that purpose. Then the settlor can dissolve the trust.
• Impossible events: If the purpose for which the trust was becomes impossible to be fulfill. Due to any damage to the trust property, the trust can be dissolved.
• Consent of beneficiaries: If all the beneficiaries mutually consent to giving up their rights in the trust property. The trust can be dissolve.
• Fixed duration: If a trust was for a specific time period. Then it will be dissolve at the end of such time period.
• Uncertainty: If after making the trust, the settlor feels that there will be uncertainty created in the trust property. Then he can dissolve the trust.
• Revocation: Certain trusts are revocable as per the terms agreed. Such trust can be revoke expressly at the will of the settlor if all the beneficiaries can enter into a contract. The trust was by a non-testamentary instrument and settlor reserve the revocation rights. If the trust was for payment of debts of the settlor, proper communication has been to the creditors.

Conclusion

There are various benefits of creating a private trust like efficient control of assets and planning for certain needs that will arise in the future. Both public and private trusts are equally recognize in India and provide for the interest of beneficiaries. Different types of trusts can be created and revoke or dissolve depending upon their type. Termination of a private trust can also be order by a court. If in its opinion the material purpose of the trust was left unfulfill. The trustee is acting for personal gains or the beneficiary is missing.