Can Creditors Claim Against A Trust In India?
- IJLLR Journal
- Mar 2
- 1 min read
Khushi Parmar, D.Y. Patil College of Law, Mumbai University
ABSTRACT
The Indian Trusts Act, 1882, serves as the legislative framework governing the creation, classification, administration, and dissolution of private trusts and trustees in India. The Indian Trusts Act, 1882 defines a trust as an obligation attached to property ownership for the benefit of another, detailing the roles of the settlor, trustee, and beneficiary. Trusts can be established through settlement or will and are classified into public, private, and charitable trusts. The Indian Trusts Act, 1882 highlights the separation of the trust assets from trustees' personal property, posing challenges for creditors claiming against the trust assets. Provisions from the Transfer of Property Act, 1882, the Income Tax Act, 1961, and the Insolvency and Bankruptcy Code, 2016, address creditors' rights and protections, particularly regarding fraudulent transfers and revocable trusts. Legal precedents reinforce the protection of trust assets from creditors' claims, emphasizing the necessity for procedural adherence and the collective responsibility of the trustees. The framework aims to balance the interests of the beneficiaries and the creditors while ensuring the integrity and lawful purpose of trust arrangements. This framework helps safeguard the assets held in the trust from creditors' claims, ensuring the trust's purpose is fulfilled for the benefit of the intended beneficiaries.
Keywords: Indian Trusts Act, 1882, Trust Assets Protection, Creditors' Claims, Fraudulent transfers, Revocable trusts.
