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Trustee Remuneration - Generally, trustees are not entitled to remuneration unless expressly provided for in the trust deed or by law. Several sources emphasize that, as a fundamental principle, trustees should not profit from their position unless explicitly permitted ["INCOME TAX OFFICER EXEMPTION WARD RANCHI RANCHI vs DUKHHARAN MEMORIAL CHARITABLE TRUST RANCHI - Income Tax Appellate Tribunal"], ["M. Z. Khan VS Commissioner Of Income-Tax - Allahabad"], ["Mumtaz Qadar Mirza Mohammad Safdar Ali VS Advocate General - Allahabad"].
Legal Principles and Restrictions - Equity forbids trustees from making a profit out of the trust, and remuneration for services may only be allowed if specified in the trust deed or through a prior agreement. For example, equity forbids a trustee to make a profit out of his trust and a trustee is not entitled to remuneration for services rendered by him to the trust except as expressly provided in the trust deed ["M. Z. Khan VS Commissioner Of Income-Tax - Allahabad"], ["Mumtaz Qadar Mirza Mohammad Safdar Ali VS Advocate General - Allahabad"].
Exceptions and Court Discretion - Courts may grant remuneration to trustees appointed as receivers or in special circumstances if no other qualified person is available. Even then, such remuneration is discretionary and not the norm ["L. Rmk. L. Kannan @ Ramakrishnan VS L. Rmk. Narayanan and Others - Madras"], ["L. Rmk. L. Kannan @ Ramakrishnan VS L. Rmk. Narayanan - Madras"]. For instance, a trustee appointed receiver of the estate of which he is the trustee may not, in general, be allowed any remuneration unless expressly permitted ["L. Rmk. L. Kannan @ Ramakrishnan VS L. Rmk. Narayanan and Others - Madras"].
Remuneration in Specific Cases - Some cases involve trustees receiving payments for duties performed, such as full-time secretaries or managing trustees, where courts or authorities have sanctioned such payments, especially if the payments are consistent with prior practice or explicitly allowed in the trust deed ["INCOME TAX OFFICER EXEMPTION WARD RANCHI RANCHI vs DUKHHARAN MEMORIAL CHARITABLE TRUST RANCHI - Income Tax Appellate Tribunal"], ["PNR Society For Relief & Rehabilitation of Disabled Trust VS Deputy Director of Income-tax (Exemption) - Income Tax Appellate Tribunal"]. Notably, the remuneration paid to the trustee was in accordance with the practice prevailing and was paid for services rendered ["PNR Society For Relief & Rehabilitation of Disabled Trust VS Deputy Director of Income-tax (Exemption) - Income Tax Appellate Tribunal"].
Statutory and Trust Deed Provisions - Many trust deeds or statutes specify whether trustees can take remuneration. If the deed explicitly states trustees are entitled to remuneration, then such payments are permissible, provided they do not violate the law or principles of equity ["INCOME TAX OFFICER EXEMPTION WARD RANCHI RANCHI vs DUKHHARAN MEMORIAL CHARITABLE TRUST RANCHI - Income Tax Appellate Tribunal"], ["Mumtaz Qadar Mirza Mohammad Safdar Ali VS Advocate General - Allahabad"].
Analysis and Conclusion:A trustee can take remuneration from the trust only if explicitly permitted by the trust deed, statute, or through court approval. Absent such provisions, trustees are generally prohibited from profiting from their position. When remuneration is paid, it must be justified as a reasonable compensation for services rendered and not as a profit. Courts retain discretion to approve such payments, especially in cases involving trustees acting as receivers or managing trustees, but the default position remains that trustees should not profit unless expressly authorized ["INCOME TAX OFFICER EXEMPTION WARD RANCHI RANCHI vs DUKHHARAN MEMORIAL CHARITABLE TRUST RANCHI - Income Tax Appellate Tribunal"], ["M. Z. Khan VS Commissioner Of Income-Tax - Allahabad"], ["Mumtaz Qadar Mirza Mohammad Safdar Ali VS Advocate General - Allahabad"].
Managing a trust involves significant responsibilities, from safeguarding assets to acting in the best interests of beneficiaries. But what if you're a trustee pouring time, skill, and resources into this role? A common question arises: can a trustee take remuneration from the trust? The short answer is nuanced—it's not an automatic right, but possible under specific conditions. This guide breaks down the legal principles, drawing from the Trusts Act, 1882, case law, and expert commentary to help trustees and beneficiaries navigate this issue.
Note: This is general information based on legal principles and is not specific legal advice. Consult a qualified lawyer for your situation.
Under Indian law, trustees generally do not have an inherent right to payment for their services. The Trusts Act, 1882, and related principles emphasize that trustees act as fiduciaries, prioritizing beneficiaries' interests over personal gain. As stated in legal commentary, a trustee’s right to remuneration is not automatic; it depends on the terms of the trust, the nature of the trustee’s role, and whether there is an express or implied provision for such payment. M. K. Rajagopalan VS Periasamy Palani Gounder - 2023 0 Supreme(SC) 462
Section 50 of the Indian Trusts Act implicitly supports this by noting that, unless directed otherwise, a trustee has no right to remuneration for their trouble, skill, or time. Controller of EState Duty VS Trustees of Prince Shahmat Ali Khan Trust - 1984 Supreme(AP) 516 Without explicit authorization, dipping into trust funds for personal pay could breach fiduciary duties, potentially leading to liability. M. K. Rajagopalan VS Periasamy Palani Gounder - 2023 0 Supreme(SC) 462
Trustees may take remuneration if:
The trust deed expressly permits it: Many trust instruments include clauses allowing payment. For example, one deed stated: each of the Trustees shall be entitled to charge remuneration... out of the income of the Trust property... as may be fixed by them by a unanimous resolution. Trustees Of Prince Shahmat Ali Khan Trust VS Controller Of Estate Duty, A. P. , Hyderabad - 1998 Supreme(SC) 520 Courts uphold such provisions, viewing them as the settlor's intent.
Customary practice or professional role: Professional trustees (e.g., lawyers, accountants) often claim fees based on industry norms. Trustees who are professionals... or who provide additional services may claim remuneration based on customary practice or contractual agreement. Thankammu C. W/o Unnikrishna Menon VS Head Master, High School, Anthikkad - 2020 0 Supreme(Ker) 307
Court appointment or additional duties: Trustees appointed by courts or handling extraordinary tasks might receive fixed pay. In one case, the court fixed remuneration at Rs.20,000 per month for a court-appointed trustee. M. E. Devarajan & Others VS B. Adhikesavalu & Others - 2008 Supreme(Mad) 3110
Implied authorization: If beneficiaries consent or circumstances justify it (e.g., expenses incurred), courts may allow reasonable claims, but this is rare and scrutinized.
The remuneration must always be justified by the trustee's role and trust nature—personal capacity trustees face stricter limits than professionals. M. K. Rajagopalan VS Periasamy Palani Gounder - 2023 0 Supreme(SC) 462
Trustees are bound by loyalty and must avoid conflicts. Taking remuneration without clear authority might constitute a breach of fiduciary duty unless explicitly permitted. M. K. Rajagopalan VS Periasamy Palani Gounder - 2023 0 Supreme(SC) 462 Excessive claims can lead to accounting for gains or removal. M. K. Rajagopalan VS Periasamy Palani Gounder - 2023 0 Supreme(SC) 462
The trust instrument is paramount. In the K.K. Modi Family Trust case, the deed empowered the Managing Trustee to act decisively, including drawing remuneration without protest, affirming deed-based authority. RUCHIR MODI Vs BINA MODI & ORS. - 2024 Supreme(Online)(DEL) 14915
Courts interpret deeds holistically: The intent of the Settlor was to allow the Managing Trustee to manage the Trust without requiring unanimous consent. RUCHIR MODI Vs BINA MODI & ORS. - 2024 Supreme(Online)(DEL) 14915
Trust income can often deduct trustee pay if authorized. The remuneration payable to the trustees... constitute deductible expenditure from the income of the trust. Commissioner of Income Tax VS Trustees of H. E. H. The Nizams Miscellaneous Trust - 1984 Supreme(AP) 347 However, it's not agricultural income exempt from tax, even if trust lands produce it—the character changes upon appropriation as pay. Maharajadhira Sir Kameshwar Singh VS Commissioner Of Income-tax, Bihar And Orissa - 1960 Supreme(SC) 250 Remuneration received by a trustee... is not exempt from income tax as agricultural income. Maharajadhira Sir Kameshwar Singh VS Commissioner Of Income-tax, Bihar And Orissa - 1960 Supreme(SC) 250
Provisions for remuneration can impact estate duty. One ruling held it a potential benefit retained by the settlor, attracting Section 10 of the Estate Duty Act. Controller of EState Duty VS Trustees of Prince Shahmat Ali Khan Trust - 1984 Supreme(AP) 516 Conversely, if no resolution passes and no pay is taken, it may not trigger inclusion. Trustees Of Prince Shahmat Ali Khan Trust VS Controller Of Estate Duty, A. P. , Hyderabad - 1998 Supreme(SC) 520
In charitable trusts, trustees relinquishing roles don't generate taxable capital gains without ascertainable costs. Principal Commissioner of Income Tax (Central), Kochi VS Gracy Babu - 2024 Supreme(Ker) 312 Remuneration remains tied to services rendered, not other benefits. Principal Commissioner of Income Tax (Central), Kochi VS Gracy Babu - 2024 Supreme(Ker) 312
Trustees retiring with reasonable cause (e.g., business exit) must follow procedures, but remuneration rights persist per deed. LAI KIAT YEONG vs HSBC (MALAYSIA) TRUSTEE BERHADLAI KIAT YEONG vs HSBC (MALAYSIA) TRUSTEE BERHAD
Courts fix pay judiciously, as in appointing trustees jointly. M. E. Devarajan & Others VS B. Adhikesavalu & Others - 2008 Supreme(Mad) 3110
Trustees should ensure that their right to remuneration is clearly provided for in the trust instrument or agreement. M. K. Rajagopalan VS Periasamy Palani Gounder - 2023 0 Supreme(SC) 462
Understanding these rules protects trustees while upholding trust integrity. For tailored guidance, reach out to a trust law specialist.
References: Analysis draws from Trusts Act, 1882, and cited documents including M. K. Rajagopalan VS Periasamy Palani Gounder - 2023 0 Supreme(SC) 462, Thankammu C. W/o Unnikrishna Menon VS Head Master, High School, Anthikkad - 2020 0 Supreme(Ker) 307, Trustees Of Prince Shahmat Ali Khan Trust VS Controller Of Estate Duty, A. P. , Hyderabad - 1998 Supreme(SC) 520, Maharajadhira Sir Kameshwar Singh VS Commissioner Of Income-tax, Bihar And Orissa - 1960 Supreme(SC) 250, Controller of EState Duty VS Trustees of Prince Shahmat Ali Khan Trust - 1984 Supreme(AP) 516, Commissioner of Income Tax VS Trustees of H. E. H. The Nizams Miscellaneous Trust - 1984 Supreme(AP) 347, Principal Commissioner of Income Tax (Central), Kochi VS Gracy Babu - 2024 Supreme(Ker) 312, M. E. Devarajan & Others VS B. Adhikesavalu & Others - 2008 Supreme(Mad) 3110, RUCHIR MODI Vs BINA MODI & ORS. - 2024 Supreme(Online)(DEL) 14915, Shree Datta Deosthan Trust, Through its authorized Trustee Secretary, Shri Sanjay Kshirsagar vs Murlidhar Eknath Rishipathak - 2025 Supreme(Bom) 1834, LAI KIAT YEONG vs HSBC (MALAYSIA) TRUSTEE BERHAD, LAI KIAT YEONG vs HSBC (MALAYSIA) TRUSTEE BERHAD.
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was violation of provisions of section 13(1)(c), in view of fact that payment of salary was being made since inception of trust and it had not been disputed by revenue in earlier years and, moreover, said trustee was exclusively working for trust, impugned order passed by Assessing Officer was to be ... During the course of assessment proceedings, the Assessing Officer observed that the assessee trust had paid substantial amounts to specified persons as remuneration namely ₹72,00,000 to Shri Rajesh Kuma....
(ii) Whether the trusteees are entitled to such benefits from the trust other than remuneration for services rendered by them? ... (ii) Whether the trusteees are entitled to such benefits from the trust other than remuneration for services rendered by them? ... We also see no reason to take a different view since it is not in dispute that the payments in question were actually made to the trust and not to the trustees in their individual names. ... Had the Carmel Educational #HL_ST....
The income of the trust appropriated by the appellant as remuneration is not received by him as rent or revenue of land; the character of the income appropriated as remuneration due is again not the same as the character in which it was received by the appellant as trustee. ... s remuneration, the balance of the income estimated at Rs. 1,63,136-4-0 was to be utilised for the objects of the trust. ... The income received from agricultural properties of the trust by the....
CKF), informed the Defendant that the Plaintiff was agreeable to take steps to appoint a new trustee and accordingly requested the Defendant to provide the particulars of various trust companies who could potentially take over on the Defendant's role as sole trustee of the Trust. ... [36] It was observed that efforts by multiple discussions with the Plaintiff/Appointor about exiting the Trust, had also been unsuccessful. The Defendant had even requested that the Plai....
Modi and on her assuming the office of Managing Trustee of the Trust, she also drew remuneration right from 2019, and again, without protest from the plaintiff. ... Managing Trustee of the Trust. ... In this regard, the plaintiff also places reliance on Clause 4.5 of the Trust Deed to state that the defendant no.1 was to continue to be the Managing Trustee and to possess the complete authority to take all decision on any matter relating to the #HL_ST....
CKF), informed the Defendant that the Plaintiff was agreeable to take steps to appoint a new trustee and accordingly requested the Defendant to provide the particulars of various trust companies who could potentially take over on the Defendant's role as sole trustee of the Trust. ... The Defendant had even requested that the Plaintiff/Appointor take the necessary steps to appoint a new trustee but to no avail. ... of the Trust, and ....
-65 as a trustee of the Sherwani Charitable Trust ?" ... The facts of the case are that the assessee was a trustee of a trust named "Sherwani Charitable Trust". Under a clause of the trust deed, one-third of the income of the trust was to be paid to the trustees as their remuneration. ... -66, 1966-67 and 1968-69 as a trustee of the Sherwani Charitable Trust ?" ... The material facts were, (1) that the assessee was....
someone other than the trustee to a beneficial interest in or entitlement to the trust fund. ... The 1976 rules were expressed to take effect from 1 July 1974. In 1981 amended rules for the Scheme were adopted ("the 1981 rules"). The 1981 rules were expressed to take effect from 6 April 1975, subject to an immaterial exception. ... This, however, is a practical problem calling for a practical solution by the Trustee. The Trustee has wide powers under cl 2 (b) of the Trust#HL_....
The Assistant Charity Commissioner directed the office to place the same before the Trust and to take appropriate action thereon. ... (4) Where the Charity Commissioner has made an order suspending, removing or dismissing any trustee and such trustee is the sole trustee or where there are more than one trustee and the remaining trustee according to the instrument of trust, cannot function or administer the trust ... that if the #HL....
or law raised by someone other than the trustee to a beneficial interest in or entitlement to the trust fund. ... [3] The first rules of the Scheme ("the 1976 rules") were attached to the Definitive Trust Deed ("the Trust Deed") of 1 April 1976. The 1976 rules were expressed to take effect from 1 July 1974. ... The 1981 rules were expressed to take effect from 6 April 1975, subject to an immaterial exception. ... This, however, is a practical problem calling for a practical solution b....
In the result, all these original side appeals are disposed of leaving the parties to bear their costs. Thereafter, they can move the Court for necessary directions. The remuneration for the above trustee appointed by the Court is fixed at Rs.20,000/-(Rupees twenty thousand only) per month which is directed to be paid by the trust.
Clause 18 of the Trust Deed provides as follows : Clause 18 : It is hereby further expressly agreed and declared that each of the Trustees shall be entitled to charge remuneration and be remunerated for rendering service as Trustee of these presents out of the income of the Trust property and the Trustees shall pay such remuneration to each of the Trustees as may be fixed by them by a unanimous resolution in that behalf from time to time 540 provided that the amount of such remuneration payable to any one Trustee for services rendered during any one year shall not exceed the sum of....
At page 241 it is stated, "When a partner is appointed receiver of the partnership estate, Courts will-not generally allow him any remuneration". The relation of trustee and cestuique trust excludes any idea of remuneration except by express antecedent contract. Though a general, it is not an inflexible, rule that no remuneration will be allowed to a trustee appointed by the Court receiver of the trust estate, (sic). Similarly a trustee appointed receiver of the estate of which he is the trustee may not, in general, be allowed any remuneration. A trustee a....
Whether or not there is a direction is not is controversy in the instant case. ( 3 ) THE law as to remuneration payable to trustees is contained in section 50 of the Indian Trusts Act, 2 of 1882, which recites, unless directed otherwise, a trustee has no right to any remuneration for the trouble, skill and loss of time in executing a trust. What is urged on behalf of the accountable person is, no resolution was passed by the trustees and no enforceable or legal right was created in favour of the trustee, therefore, section 10 is inapplicable.
The remuneration payable to the trustees is not different in character from the payment required to be made to the beneficiaries in terms of the trust. The amounts for remuneration paid to the trustee, therefore, constitute deductible expenditure from the income of the trust.
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