A trust may be created for any lawful purpose. The purpose of a trust is lawful unless it is (a) forbidden by law, or (b) is of such a nature that, if permitted, it would defeat the provisions of any law, or (c) is fraudulent, or (d) involves or implies injury to the person or property of another, or (c) the court regards it as immoral or opposed to public policy.
Every trust of which the purpose is unlawful is void. And where a trust is created for two purposes, of which one is lawful and the other unlawful, and the two purposes, cannot be separated, the whole trust is void.
Explanation. -- In this section, the expression "law" includes, where the trust property is immovable and situate in a foreign country, the law of such country.
Illustrations
(a) conveys property to B in trust to apply the profits to the nurture of female foundings to be trained up as prostitutes. The trust is void.
(b) A bequeaths properly to 5 in trust to employ it in carrying on a smuggling business, and out of the profits thereof to support A's children. The trust is void
(c) A, while in insolvent circumstances, transfers properly to B in trust for A during his lift:, and after his death for It. A is declared an insolvent. The trust for is invalid as against his creditors.
Section 5 - Trust of immovable property
No trust in relation to immovable property is valid unless declared by a non-testamentary instrument in writing signed by the author of the trust or the trustee and registered, or by the will of the author of the trust or of the trustee.
Trust of movable property
No trust in relation to movable property is valid unless declared as aforesaid, or unless the ownership of the properly is transferred to the trustee.
These rules do not apply where they would operate so as to effectuate a fraud.
Section 6 - Creation of trust
Subject to the provisions of section 5, a {rust is created when the author of the trust indicates with reasonable certainly by any words or acts (a) an intention on his part to create thereby a trust, (b) the purpose of the trust, (c) the beneficiary, and (d) the trust-property, and (unless the trust is declared by will or the author of the trust is himself to be the trustee) transfers the I rust -property to the trustee.
Illustrations
(a) A bequeaths certain properly to B, "having the fullest confidence that lie will dispose of it for the benefit of "C. This creates a trust so far as regards. A and C.
(b) A bequeaths certain property to B, "hoping he will continue it in the family". This does not create a trust, as the beneficiary is not indicated with reasonable certainty.
(c) A bequeaths certain property to B, requesting him to distribute it amongst such members of C's family as /(should think most deserving This does not create a trust, for the beneficiaries are not indicated with reasonable certainty.
(d) A bequeaths certain properly to B, desiring him to divide the bulk of it among C's children. This does not create a trust, for the trust-property is not indicated with sufficient certainly.
(e) A bequeaths a shop and stock- in- trade to B, on condition that he pays A's debts and legacy to C. This is a condition, not a trust for A "s creditors and C,
Section 7 - Who may create trusts
A trust may be created--
(a) by every person competent to contract,1and
(b) with the permission of a principal civil court of original jurisdiction, by or on behalf of a minor,
but subject in each case to the law for the time being in force as to the circumstances and extent in and to which the author of the trust may dispose of the trust-property.
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1. See section 11 of the Indian Contract Act, 1972 (9 of 1872).
Section 7 - Who may create trusts
A trust may be created--
(a) by every person competent to contract,1and
(b) with the permission of a principal civil court of original jurisdiction, by or on behalf of a minor,
but subject in each case to the law for the time being in force as to the circumstances and extent in and to which the author of the trust may dispose of the trust-property.
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1. See section 11 of the Indian Contract Act, 1972 (9 of 1872).
Section 8 - Subject of trust
The subject- matter of a trust must be property transferable to the beneficiary.
It must not be merely beneficial interest under a subsisting trust.
Section 9 - Who may be beneficiary
Every person capable of holding property may be a beneficiary.
Disclaimer by beneficiary
A proposed beneficiary may renounce his interest under the trust by disclaimer addressed to the trustee, or by setting up, with notice of the trust, a claim inconsistent therewith.
Section 10 - Who may be trustee
Every person capable of holding property may be a trustee; but, where the trust involves the exercise of discretion, he cannot execute it unless he is competent to contract.
No one bound to accept trust.--No one is bound to accept a trust
Acceptance of trust.--A trust is accepted by any words or acts of the trustee indicating with reasonable certainly such acceptance.
Disclaim of trust.--Instead of accepting a trust, the intended trustee may, within a reasonable period, disclaim it, and such disclaimer shall prevent the trust-property from vesting in him.
A disclaimer by one of two or more co-trustees vests the trust-property in the other or others, and makes him or them sole trustee or trustees from the date of the creation of the trust.
Illustrations
(a) A bequeaths certain properly to B and C, his executors, as trustees for D, B and C proved A's will. This is in itself an acceptance of the trust, and B and C hold the properly in trust for D.
(b) A transfers certain property to B in trust to sell it and to pay out of the proceeds A's debts, B accepts the trust and sells the property. So far as regards B, a trust of the proceeds is created fur A's creditors.
(c) A bequeaths a lakh of rupees to B upon certain trusts and appoints him his executor. B severs the lakh form the general assets and appropriates it to the specific purpose. This is an acceptance of the trust.