Liability of a trustee
Firdaus
(Querist) 06 April 2012
This query is : Resolved
As per the clauses in our Family Trust, it is only the existing Trustees who can appoint another Trustee.
The existing Trustees appointed a family member as a trustee by passing a resolution. However, the formal induction of the said family member as a trustee by registering a supplementary deed of indenture is pending since more than 3 years.
Queries :
(a) Without registration of the formal supplementary deed of indenture inducting the said person as a trustee, can the new trustee's name be added as a joint signatory to the Trust's bank accounts ?
(b) Is such a Trustee authorised to sign any documents in the capacity of a Trustee ?
(c) Can such a Trustee be held liable for any acts of the other Trustees which have resulted in a loss to the trust ?
(d) Is there any time limit prescribed by law (law of limitations for e.g.) in accordance with which such an appointment becomes void if not formalised ?
Raj Kumar Makkad
(Expert) 06 April 2012
a). No. Formal induction is mandatory for this purpose.
b). No. He is still a proposed trustee and not a trustee.
c). As his status has not legally became as of a trustee so he is not liable qua the act of other trustees towards the trust.
d). It is not specifically defined but the reasonable time of 1-2 years is sufficient.
ARUN KUMAR VERMA
(Expert) 07 April 2012
If the resolution is passed in terms of the exiisting trust deed, the appointment takes effect even without formal supplementary deed as the trust act does not necessitate the suppplementaty deed for addition of trustee.