More MCQs on Indian Trusts Act, 1882
- According to Section 19, who is entitled to receive the benefits of a trust?
a) The trustee
b) The settlor
c) The beneficiaries
d) Any individual who claims ownership of the trust property
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Answer: c) The beneficiaries
Explanation: Section 19 of the Indian Trusts Act states that the beneficiaries are entitled to receive the benefits from the trust as per the terms set out in the trust deed. The trustee manages the property on their behalf.
- What is the duty of a trustee if the trust property is being damaged by a third party?
a) The trustee must ignore it, as long as the beneficiaries are not affected
b) The trustee must take legal action to protect the property
c) The trustee must allow the third party to manage the property
d) The trustee can sell the property to avoid further damage
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Answer: b) The trustee must take legal action to protect the property
Explanation: If the trust property is being damaged by a third party, the trustee has a duty to take appropriate legal action to protect the property and prevent further harm. The trustee must act in the best interests of the beneficiaries.
- What does Section 51 of the Indian Trusts Act deal with?
a) Revocation of a trust
b) Trustees’ powers in relation to selling property
c) Compensation for breach of trust
d) Appointment of new trustees
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Answer: b) Trustees’ powers in relation to selling property
Explanation: Section 51 allows trustees to sell trust property when necessary for the proper management of the trust or when authorized by the trust deed. The sale must be in the best interest of the beneficiaries.
- If a trustee has personal interest in the trust property, what action must they take?
a) Disclose their interest to the beneficiaries
b) Sell their interest in the property
c) Keep their interest secret
d) Sell the trust property
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Answer: a) Disclose their interest to the beneficiaries
Explanation: A trustee must disclose any personal interest they have in the trust property to the beneficiaries to avoid any conflict of interest and ensure transparency. Failing to do so may lead to a breach of trust.
- Under Section 73 of the Indian Trusts Act, how is the liability of a trustee determined in case of breach of trust?
a) The trustee is liable for any loss caused to the trust property
b) The trustee is only liable if they acted maliciously
c) The trustee is liable only if the beneficiaries sue
d) The trustee is liable for the entire trust property, regardless of fault
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Answer: a) The trustee is liable for any loss caused to the trust property
Explanation: Section 73 holds the trustee liable for any loss caused to the trust property due to a breach of trust. The trustee must compensate for any loss caused, whether the breach was intentional or accidental.
- Can a trust be created without any specific property?
a) Yes, as long as the beneficiaries are named
b) Yes, if the trust purpose is clearly defined
c) No, a trust must have identifiable property
d) No, a trust must always have land as property
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Answer: c) No, a trust must have identifiable property
Explanation: A trust must have identifiable property to transfer legal ownership. Without property, a trust cannot be legally created, as it is an essential element of a valid trust under the Indian Trusts Act.
- What is the role of a co-trustee?
a) To act independently of the other trustee
b) To support the other trustee in managing the trust
c) To appoint new trustees without approval
d) To manage the trust solely in their own interest
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Answer: b) To support the other trustee in managing the trust
Explanation: A co-trustee shares the responsibilities of managing the trust, working collaboratively with the other trustees to act in the best interests of the beneficiaries. They must communicate and make joint decisions where necessary.
- Under what circumstance can a trustee be removed by the court?
a) If the trustee fails to disclose conflicts of interest
b) If the trustee is convicted of a criminal offense
c) If the trustee is unable to fulfill their duties
d) All of the above
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Answer: d) All of the above
Explanation: A trustee can be removed by the court if they fail to disclose conflicts of interest, are convicted of a criminal offense, or are unable to fulfill their duties. The court can intervene to protect the interests of the trust and its beneficiaries.
- Can a trust be created with an indefinite duration?
a) Yes, the trust can continue indefinitely
b) No, the trust must end within a specified period
c) Yes, but only if the settlor specifies the duration
d) No, trusts must end within 100 years
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Answer: a) Yes, the trust can continue indefinitely
Explanation: A trust can be created with an indefinite duration if the settlor does not specify a time limit. However, the trust must be for a lawful purpose and not violate public policy or be perpetual in a way that contravenes the Rule Against Perpetuities.
- Can a trust be formed for the benefit of animals under Indian law?
a) Yes, but only if the animals are specifically named in the deed
b) No, animals cannot be beneficiaries of a trust
c) Yes, but the trust must include provisions for a caretaker
d) Yes, but only if the trust is related to animal protection
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Answer: c) Yes, but the trust must include provisions for a caretaker
Explanation: Under Indian law, a trust can be created for the benefit of animals, provided that there are provisions for a caretaker or a responsible person to manage the trust. The animals themselves cannot manage the property.
- What happens if a trust deed contains a mistake regarding the name of the beneficiary?
a) The mistake invalidates the entire trust
b) The mistake can be rectified by the settlor
c) The mistake can be corrected by the court to reflect the settlor’s intentions
d) The trust is considered void, and the property is returned to the settlor
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Answer: c) The mistake can be corrected by the court to reflect the settlor’s intentions
Explanation: If there is a mistake regarding the name of the beneficiary, the court can rectify the mistake to reflect the settlor’s true intentions, as long as the trust was legally valid and the beneficiaries are identifiable.
- How does a trustee act in cases where the trust deed is silent on a specific matter?
a) The trustee can decide based on their discretion
b) The trustee must follow the instructions of the beneficiaries
c) The trustee must seek approval from the settlor
d) The trustee must act according to the general principles of law and equity
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Answer: d) The trustee must act according to the general principles of law and equity
Explanation: If the trust deed is silent on a particular matter, the trustee must act in accordance with the general principles of law and equity, ensuring that the beneficiaries’ best interests are maintained.
- Which of the following is NOT a type of trust mentioned in the Indian Trusts Act, 1882?
a) Private Trust
b) Public Trust
c) Charitable Trust
d) Conditional Trust
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Answer: d) Conditional Trust
Explanation: The Indian Trusts Act, 1882 does not specifically mention a “Conditional Trust” as a distinct type. However, trusts can have conditions, and the act recognizes private, public, and charitable trusts.
- Can a person be a trustee and a beneficiary of the same trust?
a) Yes, if the trust deed allows it
b) No, a trustee cannot be a beneficiary
c) Yes, but only in charitable trusts
d) No, the trustee must always be a third party
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Answer: a) Yes, if the trust deed allows it
Explanation: A person can be both a trustee and a beneficiary, as long as the trust deed allows it. This situation typically occurs in family trusts or other private arrangements.
