Sections 16-18 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Sections 16, 17 and 18 deal with a trustee's balancing act where more than one person benefits from the same trust. Section 16 says wasting property should be converted into something permanent and profitable. Section 17 says the trustee must be impartial. Section 18 says that if a beneficiary in possession is damaging the property, the trustee must act. For a family trust that gives income to one person and the capital to another later, a legal consultation before the deed is signed helps align these rules with your plan.
Section 16: where a trust is for several persons in succession and the property is of a wasting nature or a future or reversionary interest, the trustee must convert it into property of a permanent and immediately profitable character, unless the instrument shows a contrary intention. Section 17: with more than one beneficiary, the trustee must be impartial and not favour one at another's expense, but the Court cannot control a discretion exercised reasonably and in good faith. Section 18: the trustee must take measures to prevent a beneficiary in possession from committing or threatening destructive or permanently injurious acts.
Scope of the Act
The Act deals with private trusts. Public, charitable and religious trusts are governed by other laws; see private trust vs public trust. The three sections below concern private trusts.
Section 16: converting wasting property
Section 16 reads: "Where the trust is created for the benefit of several persons in succession, and the trust-property is of a wasting nature or a future or reversionary interest, the trustee is bound unless an intention to the contrary may be inferred from the instrument of trust, to convert the property into property of a permanent and immediately profitable character."
The conditions are cumulative: (1) the beneficiaries take in succession (for example one for life, then another); and (2) the property is wasting (it loses value with use or time, such as a short lease) or is a future or reversionary interest (not producing income now). If both are met, the trustee must convert it, unless the deed shows a contrary intention.
The Act's illustrations. (a) A bequeaths all his property to B in trust for C during his life, then for D, then for E. The property is three leasehold houses, and nothing in the will shows he meant the houses to be enjoyed in their existing form. B should sell the houses and invest the proceeds in accordance with section 20. (b) A bequeaths to B three leasehold houses in Calcutta and all the furniture in them, on the same successive trusts. Here an intention that they be enjoyed in specie (in their existing form) appears clearly, and B should not sell them. For section 20 itself see our post on investment rules for trusts under section 20.
Section 17: be impartial
Section 17 says: "Where there are more beneficiaries than one, the trustee is bound to be impartial, and must not execute the trust for the advantage of one at the expense of another." A second paragraph says that where the trustee has a discretionary power, "nothing in this section shall be deemed to authorize the Court to control the exercise reasonably and in good faith of such discretion."
| Element | Meaning |
|---|---|
| "more beneficiaries than one" | The duty arises when there are two or more beneficiaries |
| "impartial" | No favouring one at another's cost |
| Discretion | A discretion exercised reasonably and in good faith is not for the Court to control under this section |
The Act's illustration. A trustee for B, C and D is empowered to choose between several specified modes of investing the trust property. He chooses one in good faith. The Court will not interfere, although the choice may vary the relative rights of B, C and D. So impartiality does not mean the result must be equal for everyone; it means the trustee must not tilt the trust towards one person.
Section 18: prevent waste
Section 18 reads: "Where the trust is created for the benefit of several persons in succession and one of them is in possession of the trust-property, if he commits, or threatens to commit, any act which is destructive or permanently injurious thereto, the trustee is bound to take measures to prevent such act." No illustration is printed under section 18. The section does not list the "measures"; the text is silent on whether this means a notice, a demand or a suit.
A modern example of our own
Sunita Rao settles a trust: her flat in Indore is to be occupied by her widowed sister Leela for life, and then to go to her nephew Varun. Trustee Gopal Shah manages the trust.
- Section 17: Gopal must not run the flat's repairs only for Leela's convenience while ignoring Varun's later interest, or the reverse. If the deed gives him a choice between two reasonable repair plans and he picks one in good faith, section 17 does not let the Court second-guess him.
- Section 18: Leela starts demolishing a load-bearing wall to expand the kitchen. That is a destructive or permanently injurious act by a beneficiary in possession, and Gopal must take measures to stop it.
- Section 16: if instead the property were a short lease running out in a few years with several beneficiaries in succession, Gopal would be bound to convert it, unless the deed showed that the flat was meant to be enjoyed as it stands.
What the instrument of trust can change
Only section 16 contains words about the deed: the conversion duty applies "unless an intention to the contrary may be inferred from the instrument of trust". So a deed that says "my house is to be enjoyed as it stands" displaces the duty to sell. Sections 17 and 18 contain no such wording in the text we read, so the deed's effect on them is not stated; a deed that tries to excuse partiality or let a life tenant damage the property should be reviewed carefully.
Practical points
- Settlors: if you want the family home or furniture kept in kind for the life tenant, say so clearly. Otherwise a trustee may be bound to sell under section 16.
- Trustees: keep a written note of why you chose one option over another; section 17 protects good-faith, reasonable discretion.
- Life tenants: your right to possess does not include acts that are destructive or permanently injurious.
- Remaindermen: if you see waste, tell the trustee in writing; section 18 puts the duty on him to act.
Need help drafting or administering a trust with successive beneficiaries?
If your trust gives income or use to one person and capital to another, or you are a trustee dealing with a beneficiary in possession, our legal consultation service can help. Bring the deed and details of the property.
Key takeaways
- Wasting property or future/reversionary interests held for beneficiaries in succession must be converted into permanent, immediately profitable property, unless the deed shows a contrary intention (s.16).
- A trustee must be impartial between beneficiaries (s.17).
- The Court does not control a discretion exercised reasonably and in good faith (s.17).
- A trustee must act against destructive or permanently injurious acts by a beneficiary in possession (s.18).
Read next
- Section 15: care required from a trustee
- Section 19: trustee's accounts and information to the beneficiary
- Rights of a beneficiary under a trust
Disclaimer: Based on the text of the Indian Trusts Act, 1882 as consulted on 1 October 2026 from a scanned copy; the Act applies to private trusts, and public, charitable and religious trusts are governed by other laws. This article is general information, not legal advice; check the official text and take advice before acting.