Trusts and Charitable Institutions
This domain tests the law of public and private trusts, charitable purpose, trustee duties, cy pres and accounts. The AP Endowments Act covers charitable institutions, while the Indian Trusts Act, 1882 mainly governs private trusts. Expect questions on fiduciary duty and on what trustees may not do with trust property.
Core rules and concepts
- Charitable purpose includes relief of poverty, education, medical relief, advancement of religion and other objects of general public utility.
- Public trust: property is dedicated to the public; trustees are fiduciaries; no personal benefit; accounts and annual reports must be maintained.
- Cy pres: if the original purpose becomes impossible, property may be applied to a similar purpose only with court or competent-authority approval.
- Breach of trust: trustees may be personally liable, surcharged and removed for misapplication or negligence.
Worked example
A donor gives land for a hospital. The hospital later becomes unviable, and the trustees want to sell the land and fund a school. Reasoning: trustees cannot unilaterally change the dedication; cy pres requires approval. If the institution is under the Endowments Act, sale also needs statutory sanction. Answer: permissible only after approvals, not by trustee resolution alone.
Traps that cost marks
Treating trust property as trustee property; assuming every trust must be registered under one statute; ignoring the donor's intention; and confusing a private trust with a public charity.