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CS Executive · Setting Up of Business, Industrial and Labour Laws · Non-Corporate Entities

Ramesh, a beneficiary of a trust, transfers his beneficial interest to Sunita. At the date of transfer, Ramesh's interest was subject to a liability under the trust. What is Sunita's position under the Indian Trusts Act, 1882?

Sunita steps into Ramesh's position. A transferee of a beneficiary's interest has the rights and bears the liabilities the beneficiary had in respect of that interest at the date of transfer, so she cannot take only the benefits.

  1. AShe takes the interest free of Ramesh's existing liabilities
  2. BShe has the rights and is subject to the liabilities of the beneficiary in respect of that interest at the date of transferCorrect
  3. CShe has the rights only, and Ramesh keeps all liabilities
  4. DShe acquires rights only after the trustee is discharged

Explanation

Section 69 provides that a transferee of a beneficiary's interest has the rights and is subject to the liabilities of the beneficiary in respect of that interest at the date of the transfer. Hence Sunita cannot take the rights while leaving the liabilities behind.

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