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IAI Actuarial Core Principles · Business Management · Trusts and agency

Meera Iyer settles a private trust in Pune, naming her brother Anil as trustee for the benefit of her minor daughter Kavya. Anil begins to use the trust funds for his own business without Kavya's guardian's knowledge. Which right is most directly available to the beneficiary, acting through her guardian, under Indian trust law principles?

The beneficiary, through her guardian, may require the trustee to account and may seek court relief to restore the misused trust funds. Using trust money for personal business is a breach of trust, and removal needs a court order rather than happening automatically.

  1. ATo have Anil's conduct treated as a mere private family matter outside the court's reach
  2. BTo require Anil to account for the trust property and to seek restoration of the trust funds with appropriate relief from the courtCorrect
  3. CTo remove Anil automatically without any court order, because the beneficiary is a minor
  4. DTo receive only a written apology, since misuse of funds is not a breach of trust
  5. To claim ownership of Anil's own business as compensation

Explanation

A beneficiary can ask the trustee to account and can seek court relief, including restoration of the misapplied funds. Removal needs a court order, not automatic action. Misuse of trust funds is a clear breach of trust, and the remedy is restoration, not ownership of the trustee's business.

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