Q. How a trust is extinguished and in what circumstances trust may be revoked. (2007)
1. Introduction:[/B]
The term trust is generally defined as that relation between two persons by virtue of 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 to create, thereby a trust. a trust an instance of ownership of the same thing by two person at the same time.
2. Relevant Provisions:
Sec. 77, 78 and 79 of trusts act.
3. Extinction of trust:
A trust is extinguish 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 case of charitable trust:
In case of religious or charitable trusts, when the execution of such trust becomes inexpedient or impracticable, the court will execute it in accordance with 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 illegality of the purpose.
III. Destruction of subject matter:
When the subject matter or the trust property has 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 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 crated can be revoked only.
(a) By consent of beneficiaries:
By consent of the all beneficiaries where all of them are competent contract.
(b) By 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 debts of author:
When its purpose is the payment of authors debt it can be revoked.
Condition:
Such trust may be revoked at any time prior to 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 of revocation of the the trust:
Following are the some other grounds of revocation of the trust.
(i) Fraud
(ii) Execution of the trust is under mistake.
(iii) Execution of the trust is under misapprehension.
(iv) 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 so as to defeat or prejudice those acts.
8. Conclusion:
To conclude I can say that, the trusts acts describes the circumstances in which the trusts 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.
1. Introduction:[/B]
The term trust is generally defined as that relation between two persons by virtue of 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 to create, thereby a trust. a trust an instance of ownership of the same thing by two person at the same time.
2. Relevant Provisions:
Sec. 77, 78 and 79 of trusts act.
3. Extinction of trust:
A trust is extinguish 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 case of charitable trust:
In case of religious or charitable trusts, when the execution of such trust becomes inexpedient or impracticable, the court will execute it in accordance with 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 illegality of the purpose.
III. Destruction of subject matter:
When the subject matter or the trust property has 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 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 crated can be revoked only.
(a) By consent of beneficiaries:
By consent of the all beneficiaries where all of them are competent contract.
(b) By 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 debts of author:
When its purpose is the payment of authors debt it can be revoked.
Condition:
Such trust may be revoked at any time prior to 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 of revocation of the the trust:
Following are the some other grounds of revocation of the trust.
(i) Fraud
(ii) Execution of the trust is under mistake.
(iii) Execution of the trust is under misapprehension.
(iv) 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 so as to defeat or prejudice those acts.
8. Conclusion:
To conclude I can say that, the trusts acts describes the circumstances in which the trusts 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.