Specimen Deed of Revocation of Trust — When and How 2026

When Can a Trust Be Revoked?

Under Section 78 of the Indian Trusts Act, 1882: a trust may be revoked ONLY if: (a) the trust deed expressly provides for revocation — "This trust is revocable by the Settlor at any time during his/her lifetime," OR (b) ALL beneficiaries, being competent to contract, consent to revocation (even if the deed doesn't provide for it). If the trust deed is SILENT on revocation: the trust is deemed IRREVOCABLE — the Settlor cannot revoke. Key distinction: (a) Revocable trust: Settlor retains the power to revoke — can reclaim the trust property at any time. Tax implication: income taxed in Settlor's hands (Section 61-63 IT Act). (b) Irrevocable trust: Settlor gives up all rights permanently — cannot reclaim property. Tax implication: income taxed in beneficiaries' hands (more tax-efficient).

Specimen Deed of Revocation

[Illustrative format]

DEED OF REVOCATION OF TRUST

This Deed is made on [Date] at [City] by:

[Settlor Name], [Address] (the "Settlor")

RECITALS

(a) The Settlor created a private trust named "[Trust Name]" by Trust Deed dated [Date], registered at SRO [Name], Document No. [Number].

(b) Clause [X] of the Trust Deed provides: "This trust is revocable by the Settlor at any time during the Settlor's lifetime by written instrument."

(c) The Settlor now desires to exercise the power of revocation and revoke the Trust.

OPERATIVE CLAUSE

1. The Settlor hereby REVOKES the Trust created by Trust Deed dated [Date] with immediate effect, pursuant to Clause [X] of the Trust Deed and Section 78 of the Indian Trusts Act, 1882.

2. With effect from the date of this Deed: (a) the Trustees shall stand discharged from all duties and obligations, (b) ALL trust property described in the Trust Deed shall REVERT to the Settlor absolutely, (c) the Trustees shall transfer all trust property to the Settlor within [30] days.

3. The Settlor indemnifies the Trustees against all claims arising from acts done in good faith during the subsistence of the Trust.

4. The Trustees acknowledge receipt of this Deed and agree to transfer all trust property to the Settlor as directed.

Settlor: [Signature] | Trustee 1: [Signature acknowledging] | Trustee 2: [Signature] | Witnesses: 1. ___ 2. ___

Procedure for Revocation

(a) Execute the Deed of Revocation in writing — signed by the Settlor. (b) Serve notice of revocation on ALL Trustees and Beneficiaries. (c) If the trust deed was registered: register the Deed of Revocation at the SAME Sub-Registrar's office. (d) Transfer trust property back to the Settlor — execute separate transfer deeds for immovable property. (e) Close trust bank accounts — transfer funds to the Settlor. (f) File final income tax return for the trust — up to the revocation date. (g) Cancel the trust's PAN (if separate PAN was obtained).

Tax Implications of Revocation

(a) During revocable trust's existence: Income is taxed in the SETTLOR's hands (Section 61-63 IT Act) — as if the trust doesn't exist. (b) On revocation: Transfer of trust property back to the Settlor is generally NOT a taxable event (the property reverts to the original owner). (c) Capital gains: If the trust property appreciated during the trust period: no capital gains on revocation (since ownership was always with the Settlor for tax purposes). (d) For irrevocable trusts revoked by beneficiary consent: The transfer back to the Settlor may attract capital gains tax — because the trust was treated as a separate taxable entity.