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

Rohit, a Mumbai businessman, orally tells his friend Sanjay that he holds ₹5,00,000 in cash for the benefit of his niece Tara, and hands over the cash to Sanjay as trustee. There is no written document. Is the trust of this moveable property valid?

The trust is valid. For moveable property, a trust is valid if it is declared by the prescribed written instrument or will, or if ownership of the property is transferred to the trustee. Rohit transferred the cash to Sanjay, so no writing or registration is needed.

  1. AValid, because ownership of the moveable property was transferred to the trusteeCorrect
  2. BInvalid, because every trust must be in a registered written instrument
  3. CInvalid, because cash cannot be trust-property
  4. DValid only if Sanjay later registers an instrument

Explanation

For moveable property, a trust is valid if declared by a written, signed instrument or will, or if ownership of the property is transferred to the trustee. Here the cash was handed to Sanjay, so the transfer route is satisfied. Registration is required only for immoveable property.

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