THE TRUST ACT 1882 (Key Features)

Here are the key features of the Trust Act 1882.

1. CHAPTER I – PRELIMINARY: Short Title and Commencement – This Act is called the Trusts Act, 1882, and it became effective on March 1, 1882. It applies to the entire country, but certain matters, like Islamic law on waqf and family relations, are not affected. It include basic introduction of a trust. A Trust is third party fiduciary relationship in which the first party (Author) transfers a property upon the second party (Trustee) for the benefit of the third party (Beneficiaries). 
2. Repeal of Enactments – This section talks about the removal of previous laws by a governmental ordinance in 1981. In 1991 Ordinance, Trust Act 1882 was repealed for some time but it was renovated again. 
3. Interpretation Clause – “Trust” – Defines terms related to trusts, like the author of the trust, trustee, beneficiary, trust property, breach of trust, and registration. It also explains what “notice” means and refers to definitions in the Contract Act, 1872. This section interpret some clauses related to a Trust. Author of the Trust is the owner of trust. Trustee is the third person being trust and accept the confidence. Beneficiary is one who is receiving interest or capital from trustee. Beneficial Interest is the income or capital. Instrument of Trust are the documents of the trust. Breach of Trust are the set rules or guidelines from the author of trust. Registered refers to the registration of the Trust if it is registerable. Notice means that everything should be in knowledge of author or settler.
4. CHAPTER II – OF THE CREATION OF THE TRUSTS: Lawful Purpose – Trusts may be constituted for any legal purpose. Trusts may be constituted for any legal purpose. It should not violate the law, be deceptive, or contradict public policy. If it breaks the law, defrauds, harms others, or contradicts morals or public policy, it is invalid. It gives instances of illegal intent.
5. Trust of Immovable and Movable Property – Land and building trusts must be written and registered. Unless it would induce fraud, moveable property trusts must declare or transfer ownership to the trustee in writing. Moveable and immovable property are invalid unless certified Testamentary or Non Testamentary trust.
6. Creation of Trust – Explains trust creation, including the purpose, beneficiary, and trust property. It provides instances to show when a trust is created. To develop a trust, the author must use words or actions with reasonable assurance. A trust requires author, purpose, beneficiaries, and trust property.  

7. Who May Create Trusts – Any person capable of making contracts can create a trust. Minors can do so with court permission. However, laws about how the trust property can be disposed of must be followed.
8. Subject of Trust – The trust property must be transferable to the beneficiary and not just a beneficial interest under another trust.
9. Who May Be Beneficiary – Anyone capable of holding property can be a beneficiary. They can renounce their interest in the trust.
10. Who May Be Trustee – Anyone may hold property as a trustee. The trustee must be allowed to contract if discretion is needed. Trustee acceptance is optional, but must be explicitly stated. Trusts may be revoked within a reasonable period.
11. CHAPTER III – OF THE DUTIES AND LIABILITIES OF TRUSTEES: Trustee to Execute Trust – The trustee must serve the trust’s objective and follow the author’s instructions. The trustee must carry out the trust’s objective and implement the creator’s instructions unless all contract-making beneficiaries agree differently. Courts may provide permission to beneficiaries who cannot contract. If following instructions is impracticable, unlawful, or damaging to beneficiaries, the trustee is not compelled to do so. It’s anticipated that a trust founded to cover debts would pay just the debts at the time of creation, without interest.
12. Trustee to Inform Himself of State of Trust-Property – The trustee must quickly grasp the trust property, transfer it to themselves if necessary, and invest it according to the trust’s conditions. If trust property is a debt, the trustee should collect it quickly. The trustee must learn about the trust property as quickly as feasible.
13. Trustee to Protect Title to Trust-Property – Trust property ownership must be defended and preserved by the trustee. If trust property is immovable and unregistered, the trustee must register it legally. The trustee must preserve the trust title.
14. Trustee Not to Set Up Title Adverse to Beneficiary – The trustee cannot claim or help others claim trust property against the beneficiary’s interests. Trustee cannot violate its requirements or harm beneficiaries.
15. Care Required from Trustee – Trust property must be handled as carefully as personal property by the trustee. Unless otherwise agreed, the trustee is not liable for trust property loss, damage, or depreciation. The trust property must be handled as carefully as his own.
16. Conversion of Perishable Property – Unless the trust instrument says otherwise, the trustee must turn perishable or prospective trust property into something permanent and lucrative if it benefits numerous persons in succession.
17. Trustee to Be Impartial – If there are several beneficiaries, the trustee must treat them equally. Unless the trustee acts improperly or in bad faith, the court cannot intervene.

18. Trustee to Prevent Waste – If one beneficiary possesses the trust property and threatens to damage it, the trustee must take action to prevent the damage.
19. Accounts and Information – The trustee must keep accurate records of the trust property and provide full information about it to the beneficiary upon request.
20. Investment of Trust-Money – Unless the trust contract says otherwise, the trustee must invest the trust money in certain securities. These securities are lucrative and safe. Certain investments need formal authorization from life beneficiaries of trust income.
21. Mortgage of Land Pledged to Government or Deposit in Government Savings Bank – This provision states that trustees’ investing regulations don’t apply to pre-law investments. If trust money is less than three thousand rupees, trustees may invest in property used as collateral for a loan under the Land Improvement Loans Act, 1883 or deposit it in a Government Savings Bank.
22. Sale by Trustee Directed to Sell with in Specified Time – A trustee must convince the beneficiary that extending a sale deadline didn’t hurt them unless a court allows it.
23. Liability for Breach of Trust – If a trustee abuses trust regulations, they must recompense for any damage unless the beneficiary fooled them, consented to the violation without coercion, or subsequently approved it knowing all the circumstances. If the trustee fails to invest or pays the beneficiary on time, they may have to pay interest.
24. No Set-off Allowed to Trustee – A trustee can’t balance losses from breaking the rules in one part of the trust against gains from another part.
25. Non-liability for Predecessor’s Default – When one trustee replaces another, they’re not responsible for what the previous trustee did.
26. Non-liability for Co-trustee’s Default – Usually, one trustee isn’t responsible for another trustee’s mistakes. But, in some situations, like if they didn’t check how the other trustee used trust property or if they knew about a breach and didn’t act, they can be held accountable.
27. Several Liabilities of Co-trustee – If co-trustees breach the trust or enable each other to, each is liable for the loss. The less at-fault trustee may require the more at-fault trustee to share the loss.
28. Non-liability of Trustee Paying without Notice of Transfer by Beneficiary – In the event that a beneficiary’s interest is transferred without the trustee’s knowledge, the trustee isn’t liable for paying or giving the trust property to the new recipient.
29. Liability of Trustees Where Beneficiary’s Interest Is Forfeited to the Government –The trustee must follow the government’s instructions to manage trust property for a beneficiary who loses their interest.
30. Indemnity of Trustees – Except for fraud or trust breaches, trustees are solely accountable for what they receive as trustees and not for each other’s acts or losses incurred by others managing trust property.
31. CHAPTER IV – OF RIGHTS AND POWERS OF TRUSTEE: Right to Title-Deed – A trustee has the right to have the document that explains the trust and any documents that prove ownership of the trust property.
32. Right to Reimbursement of Expenses – Trustees may spend trust funds for trust management. If they spend their own money, the trust will reimburse them. If the trust doesn’t have enough money, they might demand payment from the client.
33. Right to Indemnity from Gainer by Breach of Trust – If someone else profits from a trustee breaching the regulations, they must reimburse the trustee. If the beneficiary gained, the trustee may take it back.
34. Right to Apply to Court for Opinion – Trustees may seek judicial guidance on trust property management without trial. They won’t be held responsible if they honestly follow the court’s recommendations.
35. Right to Settlement of Accounts – When a trustee finishes their duties, they can ask to have their accounts checked. If they didn’t owe anything to the beneficiary, they get a written confirmation.
36. General Authority of Trustee – A trustee can do things not explicitly mentioned in the trust document if they’re reasonable and benefit the trust. They can’t lease property for more than 21 years without court permission.
37. Power to Sell in Lots – Trustees can sell trust property either all together or in parts, publicly or privately, and at different times unless the trust document says otherwise.
38. Power to Sell Under Special Conditions – When selling trust property, trustees can include reasonable conditions in the sale contract. They can also buy back property at auction and resell it without being blamed for any loss.
39. Power to Convey – To complete a sale, trustees have the power to transfer or sell the property as needed.
40. Power to Vary Investments – If justified, trustees may invest trust money differently. Unless the trust contract indicates otherwise, lifelong trust income recipients must consent to the modification.
41. Power to Apply Property of Minors, etc. – Trustees may utilize trust money for minors’ education and upkeep. Any extra money must be saved and invested for the youngster. With court approval, they may utilize trust property for minors’ costs if income is insufficient.
42. Power to Give Receipts – Trustees can give written receipts for any money or property they handle, which clears the payer from any responsibility for what happens to it afterward unless there’s fraud.
43. Power to Compound, etc. – Trustees may settle trusts if they believe it’s best. Truthful people won’t be held accountable for losses. This applies solely to trusts created after this statute began, unless the trust deed indicates otherwise.
44. Power to Several Trustees of Whom One Disclaims or Dies – If a trustee quits or dies and there are others left, those remaining can still act unless the trust document says otherwise.
45. Suspension of Trustee’s Powers by Decree – If there’s a court order about the trust, trustees must follow it or get court permission to act differently.
46. CHAPTER V – OF THE DISABILITIES OF TRUSTEES: Trustees Cannot Renounce After Acceptance – Once a trustee agrees to be a trustee, they can’t quit unless the court allows it, the beneficiary agrees, or the trust document says they can.
47. Trustee Cannot Delegate – Trustees can’t pass their duties to someone else unless the trust document allows it, it’s normal business, it’s necessary, or the beneficiary agrees. Simple tasks like hiring help don’t count as delegation.
48. Co-trustees Cannot Act Singly – All trustees usually have to agree before taking any action unless the trust document says otherwise.
49. Control of Discretionary Power – If a trustee doesn’t use their power fairly and honestly, a court can make them follow the rules.
50. Trustee May Not Charge for Services – Usually, trustees can’t get paid for their work unless the trust document or a court says they can.
51. Trustee may not use trust-property for his own profit – A trustee may not utilize trust property for personal gain or for any other reason.
52. Trustee for sale or his agent may not buy – No trustee or agent engaged to sell trust property may directly or indirectly acquire the property or any interest in it on his own account or as agent for a third party.
53. Trustee may not buy beneficiary’s interest without permission – No trustee or recently ceased trustee may buy or become mortgagee or lessee of the trust-property or any party thereof without the permission of a principal Civil Court of original jurisdiction, unless the proposed purchase, mortgage, or lease benefits the beneficiary. No trustee whose job it is to acquire or get a mortgage or lease of specific property for the beneficiary may buy it or any portion of it for himself.
54. Co-trustee may not lend to one of themselves – A trustee or co-trustee who invests trust money in mortgage or personal security cannot invest it in himself or another co-trustee’s mortgage.
55. CHAPTER VI – OF RIGHTS AND LIABILITIES OF BENEFICIARY: Rights to rents and profits – The beneficiary is entitled to trust-property rentals and earnings, subject to the instrument of trust.
56. Right to specific execution – If there is just one beneficiary who is competent to contract or many beneficiaries who are competent to contract and of one mind, he or they may demand the trustee to transfer the trust property to them or to a person they designate. Second clause of this legislation does not apply to property received or left to a married woman, therefore she cannot sell her beneficial interest.
57. Right to inspect and take copies of instrument of trust accounts, etc. – The beneficiary has the right to inspect and copy the instrument of trust, the documents of title relating solely to the trust-property, the accounts and vouchers (if any) by which they are supported, and the trustee’s cases and opinions for guidance in his duty.
58. Right to transfer beneficial interest – If competent to contract, the beneficiary may transfer his interest, according to the legislation at the time regarding the conditions and scope of such disposition: Nothing in this provision authorizes a married woman to transfer property granted or gifted for her benefit during her marriage thus she cannot divest herself of her beneficial interest.
59. Right to sue for execution of trust – If no trustees are appointed, all trustees die, disclaim, or are dismissed, or for any other reason the trustee’s execution of a trust is impracticable, the beneficiary may suit, and the Court shall execute the trust as far as feasible until a trustee is appointed.
60. Right to proper trustees – The beneficiary has a right (according to the instrument of trust) to have the trust-property adequately safeguarded, kept, and managed by suitable people and a proper number.
61. Right to compel to any act of duty – The beneficiary has the power to force his trustee to undertake any specific obligation and prevent any intended or probable violation of trust.
62. Wrongful purchase by trustee – The beneficiary may have trust property declared subject to the trust or retransferred by the trustee if it remains unsold or by any person with trust knowledge if it was acquired from him if a trustee unjustly obtains it. This means the recipient must pay the trustee’s purchase money, interest, and property maintenance charges. If in actual possession, the trustee or purchaser must account for the property’s net profits, impose occupancy rent, and let the beneficiary deduct a proportionate amount of the purchase price.
63. Following trust-property-into the hands of third persons; into that into which it has been converted – When trust property is possessed by a third party in violation of the trust, the beneficiary may demand him to confess it or file an action or declaration.
64. Saving of rights of certain transferees – Section 63 does not grant the beneficiary any rights over property held by a transferee either in good faith for consideration without notice of the trust, or for consideration from a transferee. A judgment-creditor of the trustee attaching and buying trust property is not a transferee for consideration.
65. Acquisition by trustee of trust-property wrongfully converted – If a trustee unjustly sells or otherwise transfers trust property and then becomes the owner, the property again becomes subject to the trust, regardless of intervening transferees’ good faith notice for consideration.
66. Right incase of blended property – If the trustee unlawfully mixes trust property with his own, the beneficiary is entitled to a change on the whole fund for his due.
67. Wrongful employment by partner-trustee of trust-property for partnership purposes – If a trustee partner unlawfully uses trust property in the company or on the partnership’s behalf, the other partner is personally accountable to the beneficiaries unless he knew about it. Partners receiving such warning are jointly and severally accountable for trust violation.
68. Liability of beneficiary joining in breach of trust – If one of several beneficiaries commits a breach of trust, obtains an advantage without consent, conceals a breach, or deceives the trustee, the other beneficiaries may be at risk. This provision does not apply to property gifted or bequeathed to a married woman thus she cannot remove herself of her beneficial interest.
69. Rights and liabilities of beneficiary’s transferee – Every person to whom a beneficiary transfers his interest enjoys the beneficiary’s rights and duties at the date of the transfer.
70. CHAPTER VII – OF VACATING THE OFFICE OF TRUSTEE: Office how vacated – The office of a trustee is vacated by his death or by his discharge from his office.
71. Discharge of trustee – The trustee can be removed from office in the following ways: extinction of the trust, completion of duties, prescribed means, appointment of a new trustee, consent of the trustee and beneficiary, or court action.
72. Petition to be discharged from trust – Despite Section 11, a trustee may petition a principal Civil Court of original jurisdiction to be discharged from his office. If the Court finds sufficient cause, it may discharge him and direct his costs to be paid from the trust property. If there is no justification, the Court will not release him until a suitable replacement can be identified.
73. Appointment of new trustees on death, etc. – Whenever any person appointed a trustee disclaims, of any trustee, either original or substituted, dies, or is for a continuous period of six months absent from 1[Pakistan], or leaves 1[Pakistan] for the purpose of residing abroad, or is declared an insolvent, or desires to be discharged from the trust, or refuses or becomes, in the opinion of a principal civil court of original jurisdiction, unfit or personally incapable to act in the trust, or accepts an inconsistent trust, a new trustee may be appointed in his place by – (a) The person nominated for that purpose by the instrument or trust (if any), or (b) If there be no such person, or no such person able and willing to act, the author of the trust if he be alive and competent to contract, or the surviving or continuing trustee or trustee for the time being, or legal representative of the last surviving and continuing trustee, or (with the consent of the Court) the retiring trustee, if they all retire simultaneously, or (with the like consent) the last retiring trustee. Everyone who makes a meeting has to write it down. There may be more directors now that there is a new one. Under this rule, the Official Trustee can be chosen with his permission and the Court’s order if there is only room for one trustee who is single. This part talks about a trustee who dies before the grantor and a continuing trustee who refuses to carry out the power or quits if they are ready to do so.
74. Appointment by Court – If a vacancy or disqualification occurs and it is impractical to appoint a new trustee under section 73, the beneficiary may petition a principal Civil Court of original jurisdiction to appoint a trustee or new trustee, and the Court may do so.
75. Vesting of trust-property in new trustees – When a new trustee is appointed under section 73 or section 74, all trust-property that was previously vested in the surviving or continuing trustees or trustee, or in the legal representative of any trustee, becomes vested in the new trustee, either solely or jointly.
76. Survival of trust – If one of multiple co-trustees dies or is discharged, the trust remains and the trust property flows to the others, unless the instrument of trust states otherwise.
77. CHAPTER VIII – OF THE EXTINCTION OF TRUSTS: Trust how extinguished – Extinguishment of a trust occurs when its purpose is completed, it becomes illegal, it becomes impossible to perform due to destruction of trust property, or it is explicitly renounced.
78. Revocation of trust – A willed trust may be revoked by the testator. A trust can be revoked if all beneficiaries are competent to contract, the trust was declared by non-testamentary instrument or word of mouth, or the trust is for the author’s debts and not communicated to creditors.
79. Revocation not to defeat what trustees have duly done – No trust author may cancel a trust to undo the trustees’ work.
80. CHAPTER IX – OF CERTAIN OBLIGATIONS IN THE NATURE OF TRUSTS: Where obligation in nature of trust is created – An obligation in the nature of a trust is created in the following cases.
81. Where it does not appear that transferor intended to dispose of beneficial interest – If the owner of property transfers or bequeaths and it cannot be inferred that he intended to dispose of the beneficial interest, the transferee or legatee must hold the property for the owner or his legal agent.
82. Transfer to one for consideration paid by another – If someone transfers property for a payment paid or provided by another and it appears that the other person did not intend to pay or provide the consideration for the transferee, the transferee must hold the property for the payer or provider.
83. Trust incapable of execution or executed without exhausting trust-property – In the absence of a direction to the contrary, the trustee must hold the trust-property, or so much of it as is unexhausted, for the benefit of the trust author or his legal representative.
84. Transfer for illegal purpose – In the event that a property owner transfers it for an illegal purpose and the purpose is not carried out, the transferor is not as guilty as the transferee, and the transferee must hold the property for the transferor.
85. Bequest for illegal purpose – The legatee must retain property on trust for the testator’s legal representative if the purpose appears to be unlawful on the will or if the legatee agrees to use it unlawfully.
86. Transfer pursuant to rescindable contract – The transferee must hold property for the benefit of the transferor upon obtaining information that the contract is liable to rescission or induced by fraud or mistake. The transferor must reimburse the amount already paid.
87. Debtor becoming creditor’s representative – If a debtor becomes the executor or legal agent of a creditor, he must hold the debt for the beneficiaries.
88. Advantage gained by fiduciary – If a trustee, executor, partner, agent, director of a company, legal advisor, or other person bound in a fiduciary capacity to protect the interests of another person gain a pecuniary advantage by using his character, or if he enters into any dealings under circumstances in which his own interests are, or may be, adverse to those of the other person, he must hold.
89. Advantage gained by exercise of undue influence – When undue influence is used to degrade another’s interests, the person who gains the advantage without consideration or notice must hold it for the prejudiced party’s benefit.
90. Advantage gained by qualified owner – If a tenant for life, co-owner, mortgagee, or other qualified owner of a property gains an advantage in derogation of the rights of the other persons interested in the property, or if he represents all such persons, he must hold the advantage for the benefit of all such persons, but subject to repayment by such persons of their due share.
91. Property acquired with notice of existing contract – If a person acquires property with notice that another person has engaged into a contract affecting that property that could be enforced, the former must keep the property for the latter to give effect to the contract.
92. Purchase by person contracting to buy property to be held on trust – When a person acquires property on trust for beneficiaries, he must hold it for their benefit to fulfill the contract.
93. Advantage secretly gained by one of several compounding creditors – When creditors compound loans and one takes an excessive advantage over his co-creditors by a secret arrangement with the debtor, he must keep it for them.
94. Constructive trusts in cases not expressly provided for – Cases not covered by the preceding sections where there is no trust but the person in possession of property has not the whole beneficial interest must hold the property for the benefit of the persons having such interest, or the residue thereof, to the extent necessary to satisfy their just demands.
95. Obligator’s duties, liabilities and disabilities – The person holding property in accordance with any of the preceding sections of this Chapter must perform the same duties and be subject to the same liabilities and disabilities as if he were a trustee for the person for whose benefit he holds it: Provided that (a) where he rightfully cultivates the property or employs it in trade or business, he is entitled to reasonable remuneration for his trouble, skill, and loss.
96. Saving of rights of bonafide purchasers – This Chapter shall not restrict the rights of transferees in good faith for compensation or create an obligation to evade any legislation in effect.