More MCQs on Indian Trusts Act, 1882
- Under Section 11, the trustee is required to manage the trust property…
a) According to their own discretion
b) In a way that benefits the public
c) According to the terms of the trust
d) By seeking approval from the beneficiaries
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Answer: c) According to the terms of the trust
Explanation: Section 11 states that a trustee must follow the terms and conditions of the trust deed while managing the trust property, ensuring the settlor’s intentions are honored.
- Which of the following is NOT a valid purpose for creating a trust?
a) For charitable activities
b) For religious purposes
c) For speculative investments
d) For private benefit
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Answer: c) For speculative investments
Explanation: A trust cannot be created for speculative or unlawful purposes. Trusts must serve lawful and valid purposes such as charitable, religious, or private benefit of specific individuals.
- What is the status of a trust if its purpose becomes unlawful?
a) The trust continues with modifications
b) The trust becomes void
c) The trust property is seized by the government
d) The trustee decides the next steps
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Answer: b) The trust becomes void
Explanation: Under Section 77 of the Indian Trusts Act, a trust becomes void if its purpose becomes unlawful due to changes in law or circumstances.
- Can a single beneficiary dissolve a private trust?
a) Yes, unilaterally
b) No, not under any circumstances
c) Only with the consent of all beneficiaries
d) Only with trustee approval
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Answer: c) Only with the consent of all beneficiaries
Explanation: A private trust can only be dissolved if all the beneficiaries, being legally competent, agree to revoke the trust, provided the trust deed does not prohibit such revocation.
- What does Section 6 of the Indian Trusts Act deal with?
a) Creation of trust
b) Duties of trustees
c) Rights of beneficiaries
d) Revocation of trust
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Answer: a) Creation of trust
Explanation: Section 6 outlines the requisites for creating a valid trust, such as intention, trust property, lawful purpose, and clearly defined beneficiaries.
- A trustee is allowed to sell trust property under what conditions?
a) Only when authorized by the trust deed
b) Whenever the trustee deems it necessary
c) Only with the beneficiaries’ permission
d) Under no conditions
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Answer: a) Only when authorized by the trust deed
Explanation: A trustee can sell the trust property only if explicitly authorized by the trust deed or by a court order, ensuring the action aligns with the trust’s purpose.
- Can trust property be transferred to a minor?
a) No, never
b) Yes, with the court’s approval
c) Yes, if it benefits the minor
d) No, unless the trustee remains the guardian
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Answer: c) Yes, if it benefits the minor
Explanation: Trust property can be transferred to a minor provided it is done in their best interest and aligns with the trust’s lawful purpose. The trustee manages the property until the minor comes of age.
- What is the meaning of a “constructive trust”?
a) A trust explicitly declared by the settlor
b) A trust imposed by law in cases of wrongful conduct
c) A trust that manages only immovable property
d) A trust created for charitable purposes
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Answer: b) A trust imposed by law in cases of wrongful conduct
Explanation: A constructive trust is created by operation of law when one party wrongfully holds property that should rightfully belong to another, ensuring fairness and justice.
- What is a “resulting trust”?
a) A trust formed by explicit agreement
b) A trust created by the court
c) A trust that returns the property to the settlor
d) A trust for public welfare
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Answer: c) A trust that returns the property to the settlor
Explanation: A resulting trust occurs when the purpose of a trust is not completely fulfilled, and the remaining property reverts to the settlor or their legal heirs.
- Can a trust exist without trust property?
a) Yes, if the intention is clear
b) No, trust property is mandatory
c) Yes, with court approval
d) No, unless beneficiaries waive their rights
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Answer: b) No, trust property is mandatory
Explanation: Trust property is an essential element for a valid trust. Without it, the trust cannot exist as there is nothing to manage or transfer for the beneficiaries’ benefit.
- Under which circumstances can a trust property be used by the trustee for personal benefit?
a) If the trust deed allows it
b) If the beneficiaries approve
c) If the settlor agrees
d) Under no circumstances
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Answer: d) Under no circumstances
Explanation: A trustee cannot use trust property for personal benefit, as they are legally obligated to manage the property solely for the trust’s purpose and the beneficiaries’ benefit.
- Under Section 32, what happens if a trust purpose becomes impossible to fulfill?
a) The trust continues with modifications
b) The trust is extinguished
c) The property is handed over to the government
d) The trustee retains the property
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Answer: b) The trust is extinguished
Explanation: As per Section 77, when a trust’s purpose becomes impossible to fulfill, it is extinguished, and the trust property is disposed of as per the terms of the trust deed or law.
- What is the trustee’s obligation regarding trust accounts?
a) To maintain and render accurate accounts
b) To maintain accounts only when requested
c) To keep accounts confidential from beneficiaries
d) To maintain accounts for personal reference only
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Answer: a) To maintain and render accurate accounts
Explanation: A trustee must maintain accurate accounts of the trust property and transactions and render them to the beneficiaries or the court when required. This ensures transparency.
