Essentials of a Valid Trust

Essentials of a Valid Trust

The essentials of a valid trust are:

  • The purpose must be lawful
  • Formalities to transfer the property must be followed
  • The trust must be created with reasonable certainty.
  • The author of the trust must be competent to contract
  • The beneficiary must have the capacity to hold the property
  • Trust property must be transferable.
  • The trustee must accept the trust.
Lawful purpose:

A trust may be created for any lawful purpose: otherwise the trust is void. Where the objects are mixed up and one is legal and the other unlawful and the objects are inseparable, the entire trust is void. The purpose of a trust is not lawful if:

  1. it is forbidden by law.
  2. is of such a nature that, if permitted, it would defeat the provision of any law
  3. it is fraudulent.
  4. it involves or implies injury to the person or property of another or
  5. if the court considers it as immoral or opposed to public policy.

If the trust property consists of immovable property, then it must be in writing, signed by the author of the trust and duly registered. It may be created by will in which case registration is optional. If the trust consists of movable property, there must be a declaration to vest the property in the trustee and ownership must be transferred to the trustee with the direction to hold the trust.

Reasonable Certainty:

The author of the trust must indicate with reasonable certainty by word or act.

  1. his intention to create a trust.
  2. the purpose of the trust
  3. the beneficiary
  4. the trust property, and the property must be transferred to the trust.
Competency of the author:

The author of the trust. must be legally competent. However, by or on behalf of a minor, a trust may be created with the permission of the court.

Trust Property:

It may be any property transferable to the beneficiary. This is subject to transfer of Property Act.


The Beneficiary must have the legal capacity to hold the property. The trust is not a “must” to the beneficiary. He may renounce his interest by giving notice to the trustee.

Acceptance of trust:

Every person who is legally competent may be a trustee. He is not bound to accept the trust. He may accept expressly or by implication.

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