INTRODUCTION
The Trust Act does not affect the Islamic law as to “Waqf”, or the mutual relation of the members of an undivided family as determined by any customary or personal law or applies to public or private religious or charitable endowments or to trust to distribute prizes taken in war among the captors and this Act does not have retrospective effect.
RELEVANT PROVISIONS
Sections 77 to 79 deal with the extinction of the trust.
LITERAL MEANING
According to Section 3 of the Trust Act, of 1882:
“A trust is an obligation annexed to the ownership of property and arising out of a confidence reposed in and accepted by the owner or declared and accepted by him for the benefit of another or another and the owner.”
BREACH OF TRUST
Breaches of trust, however, numerous or extending to however long a period can not put an end to the trust nor change the character of the trust.
EXTINCTION
A valid express trust, whether it is private or public, comes to an end in any one of the situations mentioned in section 77 of the Trust Act, of 1882. Naturally, the life of a public trust is longer than that of a private trust. There is no distinction in the matter of the extinction of the trust.
REVOCATION
To revoke is to annul something by recalling or taking it back, and to annul is to make void legally. Therefore, revocation means to make void a document by recalling it or taking it back.
EXTINCTION OF TRUST
1. Fulfillment of Purpose
A trust comes to an end when its purpose is fulfilled When any beneficiary reaches the destination for which the trust was created, the trust will not be extinguished.
2. Unlawful Purpose
A trust must have a lawful purpose. A purpose lawful at the initial stage may become unlawful afterwards due to some new legislation coming into force. The trust is presumed to be extinguished from the date when it will be used for the accomplishment of an unlawful purpose.
3. Impossibility in Fulfillment of Purpose
When the fulfilment of the purpose becomes impossible by the destruction of the trust property, the trust is extinguished. If the beneficiary dies, during the period of trust, the trust will be extinguished. On the destruction of the trust property, the trust will be extinguished) The destruction of trust property may be because of any natural calamity, on account of the flood, or any other tragedy or mishap.
4. Express Revocation
The trust also loses in sanctity and ceases to exist, when it is expressly revoked.
REVOCATION OF TRUST
Circumstances of revocation of trust have been described in section 78 of the Trust Act, 1882
1. Trust Created by Will
A trust created by will may be revoked at any time. It can be revoked at the pleasure of the testator.
2. Trust Created Other than by Will
When a trust is not created by the will, it may be revoked by adopting the following procedure:
(a) By the consent of all the beneficiaries where all of them are competent to contract
(b) By exercising the power of revocation which may be expressly provided in the instrument of trust
(c) The trust can be revoked at any time before communication of the arrangement to the creditors when the purpose of the trust is just the payment of the author’s debts
3. Power of Revocation
The mere absence of the power of revocation from a voluntary trust or the presence of it by unusual provisions is not any ground for settling it aside, provided that those provisions were brought to the notice of the settler and were understood by him. A trust otherwise created can be revoked only where the trust has been declared by a non-testamentary instrument or by word of mouth, in the exercise of a power of revocation expressly reserved to the author of the trust.
4. Grounds of Revocation
There are some other grounds for revocation which are as follows.
- Fraud or undue influence in obtaining the settlement.
- The execution of the settlement misrepresentation under a fundamental mistake as to its effect
- Illusory trusts may also be revoked by the settler
EFFECT OF REVOCATION
When a trust is revoked, the revocation will not affect the acts of the trustees duly done in the execution of the trust to defeat or prejudice those acts.
CONCLUSION
A Trust is extinguished when its purpose is completely fulfilled or it becomes unlawful or the fulfilment of its purpose becomes impossible by the destruction of the trust property or otherwise or it is expressly revoked. The revocation of the trust does not defeat what the trustees have duly done. A completely constituted trust can not be revoked by the author of the trust. However, if a power has been provided in the instrument of trust then the trust can be revoked.
FAQs
Explain in detail the Extinction of Trust.
(2019-A, 2015-A)
How trust is extinguished and in what circumstances trust may be revoked?
(2018-S, 2017-S, 2016-S)
How trust is extinguished?
