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Creation and Registration of Trust under Trust Laws of Pakistan

Law of Trust in Pakistan
The Trusts Act 1882 (the “Act”) provides the law related to trusts in Pakistan. A trust under the Act may be created for any lawful purpose by a person competent to contract. The person who creates the trust is referred to as the “Author of the trust”. The Author can create the trust for the benefit of a person capable of holding property (“beneficiary”) in respect of property transferable to the beneficiary which is not merely a beneficial interest under a subsisting trust. He may either do this himself or appoint a trustee to manage the trust.

Creation and registration of Trust
A trust of immoveable property must be declared by an instrument in writing, such as a Trust Deed, signed by author of the trust or the trustee. The trust deed is also required to be registered. No trust of moveable property is valid unless declared as aforesaid or unless ownership of the property is transferred to the trustee.

Essential of a Trust:
The author of the trust must indicate with reasonable clarity: (a) an intention to create a trust,
(b) purpose of the trust,
(c) the beneficiary, and
(d) the trust-property, and (unless the trust is declared by will or author of the trust is himself to be the trustee) transfer the trust-property to the trustee.

Requirements of a Trust
• It should not be forbidden by law.
• It should not be of such nature that, if permitted it could defeat the provisions of any law.
• It should not be fraudulent.
• It should not involve or imply injury to the person or property of another or
• It should not be such as would be regarded by a court as immoral or opposed to the public policy.

Types of Trust-Private and Public:
A Trust may be Private and Public: When the purpose of the trust is to benefit an individual or a group of individuals or his or their descendants for any legal person and who is capable of holding property, it is a private trust.
When the purpose of the trust is to the benefit the public or any section of the public, it is public trust.

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 is bound to accept a trust.
Duties and Liabilities of Trustees in Pakistan
A trustee is bound to fulfil the purpose of the trust and, except as modified by consent of the beneficiaries, obey the directions of the author of the trust given at time of its creation; to acquaint himself with, and (where necessary) secure the transfer to himself of, the trust-property; to take steps for its preservation and deal with it as carefully as man of common prudence; to convert perishable trust-property into permanent and profitable property and to prevent waste; to keep accounts of the trust-property, and to observe impartiality as between several beneficiaries.

Rights and Powers of Trustees Under the Act
A trustee is entitled to possession of the instrument of trust and title deeds relating to the trust-property; to reimbursement of expenses and to recoup over-payments made to a beneficiary; to apply to the court for its advice or direction as to management of the trust-property; if empowered to sell the trust-property, to sell the same either together or in lots, by public auction or by private contract, and subject to such special conditions as he thinks fit; to vary investments; to apply property held in trust for a minor for the minor’s maintenance, education and advancement; to give receipts for money and moveable property; to compound debts relating to the trust; and generally to do all acts for the realization, protection or benefit of the trust-property and for the protection and benefit of a beneficiary not competent to contract.

Extinction of Trusts.
A trust is extinguished if:
1. The purpose for which it was created is completed;
2. The purpose becomes unlawful;
3. The fulfillment of the purpose becomes impossible; or
4. The trust is revoked

Details of Trust Act, 1882

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