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

Vikram, a beneficiary of a trust, transfers his interest to Sunil. Vikram's interest was subject to a liability at the date of transfer. Sunil's solicitor asks what applies to Sunil under the Indian Trusts Act, 1882. Which statement is correct?

Sunil has Vikram's rights and is subject to Vikram's liabilities in respect of that interest as at the date of transfer. The Indian Trusts Act, 1882 treats the transferee of a beneficiary's interest as taking it with both its benefits and its burdens.

  1. ASunil gets the rights but takes no liabilities of Vikram
  2. BSunil has the rights and is subject to the liabilities of Vikram in respect of that interest at the date of transferCorrect
  3. CSunil gets neither rights nor liabilities until the trustee consents
  4. DSunil is subject to liabilities only, with no rights

Explanation

The Act provides that a person to whom a beneficiary transfers his interest has the rights and is subject to the liabilities of the beneficiary in respect of that interest at the date of transfer. So Sunil steps into Vikram's position, including the liability. The option giving only rights ignores the liabilities.

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