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Business News/ Money / How to tackle concerns regarding a trustee’s management of property
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How to tackle concerns regarding a trustee’s management of property

The trustee is obligated to act in terms of the mandate given by the settlor/author of the trust under the trust deed and also perform in a bona fide manner

The instrument by which a trust is declared is called an instrument of trust and is generally known as the ‘trust deed. (iStockphoto)Premium
The instrument by which a trust is declared is called an instrument of trust and is generally known as the ‘trust deed. (iStockphoto)

‘A’ has established a trust to manage his extensive portfolio of real estate assets for the benefit of his children and grandchildren. He appointed his longtime friend, ‘B’, as the trustee. Recently, some beneficiaries have raised concerns about the management of the trust properties, questioning whether ‘B’ is fulfilling his duties properly. In a trust, what are the fiduciary responsibilities of trustees regarding the management of trust property?

—Name withheld on request.

The instrument by which a trust is declared is called an instrument of trust and is generally known as the ‘trust deed’. A private trust related to immovable property must be created by a non-testamentary instrument in writing, signed by the author of the trust or the trustee, and must be registered. Therefore, every non-testamentary instrument declaring a trust must be registered.

Read more | Can a trustee also be a beneficiary while setting up a trust in India?

The trustee is obligated to act in terms of the mandate given by the settlor/author of the trust under the trust deed and also perform in a bona fide manner. Any act in deviance from the instructions given in the trust deed and/or against the laws relating to it, including the Indian Trusts Act, 1882, will naturally be an action amounting to breach of trust. This is both a civil and criminal act, and appropriate proceedings can be initiated by A for the benefit of the beneficiaries as also to mitigate further losses. Alternatively, the beneficiaries may collectively come forward to extinguish the trust deed.

Only the competent courts have the power to entertain, try and adjudicate matters arising under the Indian Trusts Act.

My brother and I inherited a large family home from our parents, located in the heart of Pune. While I wish to sell the property and distribute the proceeds, my brother insists on keeping it, leading to a deadlock. What is the legal solution to this deadlock as it is a jointly owned property?

—Name withheld on request.

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We understand that both you and your brother have inherited equal rights in the ‘large family home’. Therefore, both are ‘co-owners’ in equal share. Since the property is in the nature of an immovable property, it cannot be divided by metes and bounds, and, therefore, in this situation where your brother is not willing to sell the property, you may either adopt proceedings and seek partition of the property from a competent court or, in the alternative, seek a direction to sell the property and divide the sale proceeds thereof equally among yourself and your brother.

Since in your case there is a total deadlock, it is advisable to initiate legal proceedings and amicably settle the matter in court.

Aradhana Bhansali is a partner at Rajani Associates.

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Published: 11 Jun 2024, 05:40 PM IST
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