More MCQs on Indian Trusts Act, 1882
- What is the effect of an unlawful object of a trust?
a) The trust becomes void.
b) The trust continues but the object is modified.
c) The trust becomes public property.
d) The trust is transferred to the settlor.
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Answer: a) The trust becomes void.
Explanation: As per Section 4 of the Indian Trusts Act, 1882, a trust cannot be created for an unlawful object. If the purpose of the trust is unlawful, the trust is considered void.
- What is the trustee’s liability if they fail to fulfill their duties?
a) No liability unless the beneficiaries object.
b) Personally liable for any loss caused.
c) Only liable for gross negligence.
d) Not liable if they acted in good faith.
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Answer: b) Personally liable for any loss caused.
Explanation: A trustee is personally liable for any loss caused to the trust property due to failure in fulfilling their duties, regardless of whether the failure was intentional or due to negligence.
- Which of the following best defines a fiduciary relationship?
a) A relationship based on equal ownership
b) A relationship of trust and confidence
c) A relationship based on monetary compensation
d) A relationship governed by a contract only
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Answer: b) A relationship of trust and confidence
Explanation: A fiduciary relationship refers to a relationship of trust and confidence, such as that between a trustee and beneficiary, where the trustee must act in the best interest of the beneficiary.
- Under which section can a trustee obtain direction from the court in cases of doubt?
a) Section 34
b) Section 77
c) Section 24
d) Section 11
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Answer: a) Section 34
Explanation: Section 34 of the Indian Trusts Act, 1882, provides that a trustee may apply to the court for direction in cases of doubt regarding the management of trust property or execution of the trust.
- What is the legal effect of a trustee mixing personal property with trust property?
a) The trust is dissolved.
b) The trustee is discharged from duties.
c) The trustee is liable to separate and restore the property to the trust.
d) The beneficiaries lose their rights.
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Answer: c) The trustee is liable to separate and restore the property to the trust.
Explanation: If a trustee mixes personal property with trust property, they are obligated to separate it and restore the trust property. They are also liable for any loss caused to the trust.
- Who can revoke a trust under the Indian Trusts Act, 1882?
a) The trustee
b) The settlor
c) The beneficiaries
d) The court
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Answer: b) The settlor
Explanation: A settlor can revoke a trust only if it contains an express provision for revocation. Otherwise, a trust cannot be revoked unilaterally once created.
- Can a trustee refuse to accept the trust?
a) No, a trustee is always obligated to accept.
b) Yes, but only with the settlor’s permission.
c) Yes, a trustee can refuse to accept the trust.
d) No, the trustee must first accept and then resign.
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Answer: c) Yes, a trustee can refuse to accept the trust.
Explanation: A trustee is not legally obligated to accept a trust. They may refuse it, but once accepted, they are bound to fulfill the duties imposed by the trust.
- What happens if a trust is created without specifying the beneficiaries?
a) The trust is void.
b) The trustee becomes the beneficiary.
c) The court determines the beneficiaries.
d) The property reverts to the settlor.
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Answer: c) The court determines the beneficiaries.
Explanation: If the beneficiaries are not specified, the court can interpret the trust and decide the intended beneficiaries based on the settlor’s intentions.
- What does Section 10 of the Indian Trusts Act, 1882, specify about trustees?
a) The trustee’s qualifications
b) Who can become a trustee
c) Duties of trustees
d) Extinction of trusts
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Answer: b) Who can become a trustee
Explanation: Section 10 states that any person capable of holding property and entering into contracts can be appointed as a trustee, provided they accept the trust.
- Which of the following is an essential element for a valid trust?
a) Trust property must be immovable.
b) The settlor must transfer ownership of the property.
c) The trustee must be a government official.
d) Beneficiaries must always be individuals.
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Answer: b) The settlor must transfer ownership of the property.
Explanation: A valid trust requires the settlor to transfer ownership of the trust property to the trustee for the benefit of the beneficiaries or for a lawful purpose.
- Can a trustee delegate their powers under the Indian Trusts Act, 1882?
a) Yes, for all duties.
b) Yes, but only with authorization in the trust deed.
c) No, never.
d) Yes, with beneficiary approval.
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Answer: b) Yes, but only with authorization in the trust deed.
Explanation: A trustee can delegate their duties and powers only if explicitly authorized in the trust deed or in situations permitted by law. Unauthorized delegation constitutes a breach of trust.
- Which type of trust is created without a formal declaration?
a) Express trust
b) Implied trust
c) Private trust
d) Charitable trust
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Answer: b) Implied trust
Explanation: An implied trust arises when a trust is created by conduct or circumstances, without a formal declaration, based on the settlor’s intentions or legal requirements.
More MCQs on Indian Trusts Act, 1882
- In the Indian Trusts Act, 1882, what is the primary duty of a trustee with respect to the trust property?
a) To retain the property without managing it
b) To invest the property in speculative ventures
c) To preserve and protect the trust property
d) To transfer the property to their personal account
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Answer: c) To preserve and protect the trust property
Explanation: The trustee’s primary duty is to preserve and protect the trust property and ensure it is utilized only for the purpose of the trust. They must act prudently and in the best interest of the beneficiaries.
- Who has the power to appoint a new trustee if a trustee vacates the position?
a) The court
b) The settlor or existing trustees
c) The beneficiaries
d) None of the above
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Answer: b) The settlor or existing trustees
Explanation: If the trust deed permits, the settlor or the remaining trustees have the power to appoint a new trustee. In the absence of such provision, the court may appoint a trustee.
- What is the effect of fraud by a trustee on the trust?
a) The trust becomes invalid
b) The trust property is confiscated by the court
c) The trustee is removed and held liable
d) The beneficiaries lose their rights
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Answer: c) The trustee is removed and held liable
Explanation: If a trustee commits fraud, they can be removed by the court and held personally liable for the losses caused to the trust property or the beneficiaries. The trust remains valid unless the purpose becomes unlawful.
- Under the Indian Trusts Act, 1882, when can a beneficiary compel the performance of a trust?
a) At any time, regardless of circumstances
b) Only when the trustee violates the trust
c) When the trust purpose is in jeopardy
d) Both b and c
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Answer: d) Both b and c
Explanation: A beneficiary can compel the performance of the trust when the trustee violates the trust’s provisions or if the trust purpose is in jeopardy due to the trustee’s actions.
- Which section of the Indian Trusts Act, 1882, deals with the trustee’s right to reimbursement of expenses?
a) Section 13
b) Section 31
c) Section 32
d) Section 39
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Answer: b) Section 31
Explanation: Section 31 of the Indian Trusts Act, 1882, states that a trustee is entitled to reimbursement of expenses incurred in the execution of the trust, provided the expenses are reasonable and for the trust’s benefit.
- Under what circumstances can a trust be revoked by the settlor?
a) If the trust deed contains an express power of revocation
b) If the beneficiaries agree
c) If the purpose of the trust is illegal
d) All of the above
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Answer: a) If the trust deed contains an express power of revocation
Explanation: A trust can only be revoked if the trust deed explicitly provides for revocation by the settlor. The consent of beneficiaries is not required unless stated in the trust deed.
- Who among the following cannot create a trust under the Indian Trusts Act, 1882?
a) A minor
b) A company
c) A Hindu undivided family
d) A legally competent individual
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Answer: a) A minor
Explanation: A minor cannot create a trust as they lack the legal capacity to contract. Trusts can only be created by persons or entities capable of holding and transferring property.
- What happens if a trustee disclaims the trust?
a) The trust is automatically extinguished
b) The court appoints a new trustee
c) The settlor must appoint a new trustee
d) Both b and c
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Answer: d) Both b and c
Explanation: If a trustee disclaims the trust, the settlor may appoint a new trustee if the trust deed allows. If the settlor is unavailable or fails to act, the court can appoint a new trustee.
- What is the trustee’s obligation when they receive a higher offer for trust property being sold?
a) They can ignore the higher offer.
b) They must consider the higher offer for the benefit of the beneficiaries.
c) They must refuse all offers.
d) They are obligated to consult the settlor.
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Answer: b) They must consider the higher offer for the benefit of the beneficiaries.
Explanation: A trustee is obligated to act in the best interest of the beneficiaries. If a higher offer is received, it must be considered to maximize the benefits of the trust.
- Which of the following is NOT a mode of extinguishing a trust under Section 77?
a) Fulfillment of the trust purpose
b) Becoming unlawful
c) Settlor’s insolvency
d) The trust purpose becoming impossible
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Answer: c) Settlor’s insolvency
Explanation: A trust is extinguished under Section 77 when its purpose is fulfilled, becomes unlawful, or becomes impossible to carry out. The insolvency of the settlor does not affect the validity of an already created trust.
- Under the Indian Trusts Act, 1882, who can sue the trustee for breach of trust?
a) Only the settlor
b) Only the beneficiaries
c) Both settlor and beneficiaries
d) The government
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Answer: b) Only the beneficiaries
Explanation: The beneficiaries of a trust have the legal right to sue the trustee for breach of trust, as they are the ones affected by the trustee’s actions or omissions.
- Which section deals with the trustee’s liability in case of a breach of trust?
a) Section 21
b) Section 23
c) Section 24
d) Section 30
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Answer: b) Section 23
Explanation: Section 23 of the Indian Trusts Act, 1882, deals with the liability of trustees in case of a breach of trust, specifying the circumstances under which they are held accountable.
- What does the term “cestui que trust” refer to?
a) The settlor
b) The trustee
c) The beneficiaries
d) The court
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Answer: c) The beneficiaries
Explanation: The term “cestui que trust” refers to the beneficiaries of a trust, who have the equitable right to enjoy the trust property in accordance with the trust deed.
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.
