How a trust is extinguished
How a trust is extinguished and in what circumstances trust be revoked?
1. Introduction:
The term trust is generally defined as that relation between two persons by which one of them holds property for the benefit of another, or as an equitable right, title, or interest in property, real or personal, distinct from the legal ownership thereof. it is not created unless the author of the trust indicates with reasonable certainty by any words or acts an intention or his part of creating, thereby a trust. a trust is an instance of ownership of the same thing by two people simultaneously.
2. Relevant Provisions:
Sec. 77, 78, and 79 of the Trusts Act.
3. Extinction of trust:
A trust is extinguished in the following circumstances.
I. Fulfillment of the purpose:
When the purpose or purposes to be attained or for which it was created, have been achieved, the trust stands extinguished.
In the case of charitable trust:
In the case of religious or charitable trusts, when the execution of such trust becomes inexpedient or impracticable, the court will execute it by the rule of cypress, meaning as nearly as possible to the original purpose.
II. Purpose becomes unlawful:
When the trust of which the purpose has become unlawful is void, hence will extinguished immediately after the illegality of the purpose.
III. Destruction of subject matter:
When the subject matter or the trust property has been destroyed due to any reason beyond human control, the trust shall stand extinguished.
IV. Express revocation by the author:
Where the settler reserves the power of revocation for himself, the trust shall extinguished when he has exercised power.
4. Revocation of trust:
I. Meaning of revocation:
Revocation means to annual something by recalling or taking it back. it may mean the undoing of a thing already granted in writing by making it legally ineffective.
II. Revocation of trust created by will:
Where a trust is created by will, it may be revoked at the pleasure of the testator.
III. Revocation of trust otherwise created:
A trust otherwise created can be revoked only.
- By consent of beneficiaries:
- By consent of all beneficiaries where all of them are competent to contract.
- By the instrument of trust:
- By expressly providing in the instrument of the trust for a power of revocation by exercising such a power a trust may be revoked.
If the purpose is to pay the debts of the author:
When its purpose is the payment of the author's debt it can be revoked.
Condition:
Such trust may be revoked at any time before the communication of the arrangement to the creditors.
5. Case law:
PLD 1996 Lah. 978
It was held that branches, however numerous or extending to however long neither put an end to trust nor change the character of the trust.
6. Other grounds for revocation of the trust:
Following are some other grounds for revocation of the trust.
Fraud
Execution of the trust is under mistake.
Execution of the trust is under misapprehension.
Illusory trust.
7. 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.
8. Conclusion:
To conclude I can say that, the trust acts describe the circumstances in which the trusts are extinct by the operation of law. a valid trust once created is irrevocable by any subsequent act of the author of the trust. however, there are exceptional cases when a trust can be revoked by the testator.
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