A Legal Guide to Family Trusts, Hiba/Gift of Property, Inheritance Rights and Challenges in Pakistan

Property owners in Pakistan often want to arrange their assets during their lifetime so that their property is managed or transferred according to their wishes. This becomes particularly important where a person owns valuable immovable property and wants to provide for a spouse, children or other family members.

Two legal arrangements that are frequently considered are Hiba (gift) and a trust. Although both can be used in family property planning, they are legally different arrangements and have different consequences.

A properly created transaction may be legally effective, but neither a Hiba nor a trust should be described as completely immune from challenge. Courts can examine the validity of the transaction where there are allegations of fraud, lack of capacity, undue influence, absence of acceptance, failure to complete the required formalities, defective transfer, sham arrangements or other legal defects.

What Is Hiba in Pakistan?

Hiba is a gift under Muslim law.

A Hiba involves the transfer of property by one person to another without consideration. For a valid Hiba, Pakistani courts generally recognize three essential elements:

Declaration or offer by the donor
Acceptance by the donee
Delivery of possession

The Supreme Court reaffirmed these requirements in Hayat Muhammad through LRs v. Muhammad Riaz, 2023 SCMR 2012, holding that a valid Muslim gift requires offer, acceptance and delivery of possession. The Court also recognized that an oral gift of movable or immovable property can be valid under Muslim law, although it may subsequently be reduced to writing as evidence.

Therefore, merely preparing a document describing something as a “gift” does not necessarily settle every legal question concerning the transaction.

What Is a Trust?

A trust is fundamentally different from an outright gift.

Under the Islamabad Capital Territory Trust Act, 2020, a trust involves an obligation attached to ownership of property for the benefit of a beneficiary. The legislation identifies the author of the trust, trustee, beneficiary and trust property as important components of the arrangement.

For example:

A property owner may establish a trust, transfer specified property to the trust/trustee and provide that the property or its income is to be managed for specified beneficiaries according to the terms of the trust deed.

The trustee then holds and manages the trust property according to the trust instrument and applicable law.

This is different from Hiba, where ownership is transferred as a gift to the donee.

Hiba vs Trust — What Is the Difference?

Hiba	Trust
Gift under Muslim law	Separate legal arrangement involving trustee and beneficiary
Donor transfers property to donee	Trust property is held/managed for beneficiaries
Offer, acceptance and possession are important	Intention, purpose, beneficiary and trust property must be identified
Can be oral under Muslim law	Formal requirements apply, particularly for immovable property
Donee receives the gifted interest	Trustee administers property according to trust terms
Challenge may involve invalid gift, fraud, coercion etc.	Challenge may involve invalid creation, sham/fraudulent purpose, breach of trust etc.

The appropriate structure depends upon the owner’s actual objective.

Hiba / Challenging an Existing Trust or Gift

Need Legal Assistance With Hiba, Gift or Trust Property?
If you are planning to make a Hiba/gift of property, or if you are facing a dispute concerning a gift deed, Hiba, family trust, mutation, inheritance or property transfer, our legal team can review the relevant documents and circumstances and advise on the available legal remedies. Bukhari, The Legal Guardians & Associates LLP represents clients in property, inheritance, Hiba, trust and civil litigation matters in Islamabad and across Pakistan, including proceedings concerning the validity or challenge of property transfers.

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How Is a Family Trust Created in Islamabad?

For property situated in Islamabad, the Islamabad Capital Territory Trust Act, 2020 is particularly relevant.

Section 3 provides that a trust concerning immovable property must be declared through a non-testamentary written instrument signed by the author of the trust or trustee and registered, or through a will in the circumstances specified by the Act, with ownership transferred to the trust.

The Act further requires the trust arrangement to identify with reasonable certainty:

The intention to create the trust;
The purpose;
The beneficiary;
The trust property; and
The transfer of the trust property to the trustee, subject to the statutory exceptions.

For Islamabad, the Act also provides that a trust is not functional unless registered with the Directorate of Labour and Industries, Islamabad Capital Territory, and requires registration of trust property in accordance with the Act and the Registration Act, 1908.

Can a Trust Be Used for Family Property Planning?

A properly structured family trust can be used for legitimate property-management and succession-planning objectives, depending upon the circumstances.

For example, a property owner may want:

Property to be managed for children;
Rental income to be distributed among beneficiaries;
Property to remain under professional management;
Different beneficiaries to receive defined benefits;
Property to be preserved for future generations; or
A trustee to manage property for beneficiaries who are minors.

However, a trust should not simply be created as a document to give the appearance that property has been transferred when the underlying legal requirements have not actually been satisfied.

Can a Trust Be Challenged?

Yes.

A trust is not automatically immune from legal challenge merely because a trust deed has been prepared or registered.

A challenge may arise where, for example:

1. The trust was never validly created

If the essential requirements for creation of the trust are absent, its validity may be questioned.

The Supreme Court has discussed the importance of the traditional “three certainties” of a trust: intention, trust property and beneficiaries. In Muhammad Hanif Abbasi v. Jahangir Khan Tareen, PLD 2018 SC 114, the Court discussed these requirements and also examined whether an alleged trust arrangement was genuine or merely a sham.

2. The trust is a sham

A trust that exists only on paper while the supposed settlor continues to exercise the same beneficial ownership and control may attract judicial scrutiny.

The Supreme Court discussed this issue in Muhammad Hanif Abbasi v. Jahangir Khan Tareen, observing that where the intention to create the trust is palpably false and the arrangement is a sham, the trust may fail.

This does not mean that every trust in which the settlor retains some powers is a sham. The actual terms, ownership structure, control and conduct must be examined.

Can a Trust Be Challenged on the Ground of Fraud?

Yes, if fraud is properly alleged and proved.

The Islamabad Capital Territory Trust Act itself provides that a trust purpose is not lawful where, among other things, it is fraudulent, defeats the provisions of law or causes injury to another’s property or rights.

A person challenging a transaction based on fraud should therefore provide specific particulars and evidence, rather than merely making a general allegation that the document was fraudulent.

Can Hiba Be Challenged?

Yes, a Hiba can be challenged where there is a legally sustainable basis.

For example, a challenge may concern:

Whether the donor actually made the gift;
Whether the donor was competent to make the gift;
Whether the gift was voluntarily made;
Whether acceptance occurred;
Whether possession was delivered;
Whether the document or mutation genuinely reflects the transaction;
Whether fraud or undue influence was involved;
Whether the donor’s signature/thumb impression was genuine;
Whether the transaction was obtained through coercion or deception; or
Whether other legal requirements were satisfied.

However, the person challenging the gift must prove the grounds relied upon.

Supreme Court: Failure to Prove the Essentials of Hiba

The Supreme Court’s decision in Mst. Tahira Samina and others v. Javed Saeed Tariq and others, 2024 SCMR 24 is particularly useful.

In that case, the Court found that the alleged donee was not even present in Pakistan when the gift deed was prepared and registered. The Court therefore found serious difficulty in establishing offer, acceptance and delivery of possession, which are necessary elements of a valid gift under Muslim law. The Supreme Court ultimately allowed the challenge to the gift.

This demonstrates an important point:

Registration of a gift deed does not necessarily eliminate every question concerning the validity of the underlying Hiba.

The surrounding circumstances and essential ingredients of the gift remain relevant.

What About Mutation of Gift Property?

A mutation can be important evidence, but it should not automatically be treated as conclusive proof of title or of every element of the underlying gift transaction.

In Rehmat Noor v. Zulqarnain, 2023 SCMR 1645, the Supreme Court discussed the evidentiary requirements for proving a gift and emphasized that the essential elements of the original gift transaction must be established. The Court also considered the limited evidentiary significance of mutation and the burden relating to proof of fraud.

Accordingly, a party relying on a gift should preserve evidence concerning the actual declaration, acceptance and delivery of possession, rather than relying exclusively upon a mutation entry.

Can a Donor Cancel a Hiba After Giving Possession?

This requires an important distinction.

Under the Muslim-law principles discussed by the Supreme Court, revocation of a gift is generally different before and after delivery of possession.

In Hayat Muhammad v. Muhammad Riaz, 2023 SCMR 2012, the Supreme Court explained that revocation as contemplated under the relevant Muslim-law principle can only occur before delivery of possession. Once the gift has been completed by the necessary ingredients, the donor cannot simply treat the transaction as cancelled merely because he later changes his mind.

However, this does not mean that a completed gift can never be challenged.

A completed gift may still be challenged on an independent legal ground—for example, where the challenger alleges and proves fraud, coercion, lack of capacity, absence of a required element or another defect affecting validity.

Can Children Challenge a Hiba Made by Their Father?

This depends upon the circumstances.

If a father validly gifts property during his lifetime, the property may cease to form part of his estate to the extent of the valid transfer.

Therefore, other children cannot simply claim that they should have received the property as inheritance merely because they are heirs.

But if the children allege that the gift was not genuine or legally valid, they may have grounds to challenge it, subject to proof.

The Supreme Court has repeatedly emphasized the importance of evidence concerning the essential ingredients of a gift.

Can a Father Create a Trust Instead of Giving Hiba?

Potentially, but the two structures have very different legal consequences.

A person considering family asset planning should first determine what he actually wants:

If the objective is immediate transfer to one person

A properly completed Hiba may be relevant.

If the objective is long-term management for several beneficiaries

A trust may be considered, subject to the applicable trust legislation and Muslim personal-law considerations.

If the objective is religious or charitable dedication

A waqf may be a different legal structure and should not simply be treated as an ordinary private family trust.

The Islamabad Capital Territory Trust Act expressly preserves the rules of Muslim law concerning waqf and certain family/personal-law relationships.

Can a Trust Be Created Just to Defeat Inheritance Rights?

This requires careful legal planning.

A person cannot assume that simply calling an arrangement a “trust” will automatically defeat every claim arising under applicable law.

The trust must itself comply with the applicable legislation and personal-law framework, and the courts can examine whether the arrangement is genuine or fraudulent.

The Islamabad Capital Territory Trust Act provides that the creator’s power to dispose of property is subject to the law applicable to the circumstances and extent of that disposition.

Accordingly, family succession planning should be undertaken before signing or transferring property, rather than attempting to correct an improperly structured arrangement after a dispute begins.

What Evidence Is Important When Challenging Hiba?

A person challenging a Hiba should collect evidence such as:

Original gift deed;
Mutation record;
Revenue record;
Title documents;
Evidence concerning possession;
Medical records where capacity is disputed;
Statements of witnesses;
Correspondence;
Bank records where relevant;
Evidence of coercion or undue influence;
Previous litigation;
Statements made by the donor; and
Any evidence contradicting the alleged gift.

The exact evidence required depends upon the ground of challenge.

What If Fraud Is Alleged?

Fraud must be pleaded with sufficient particulars.

Under Order VI Rule 4 CPC, where a party relies upon fraud, misrepresentation, breach of trust, wilful default or undue influence, the necessary particulars should be stated in the pleadings.

This is important because a pleading simply saying:

“The gift deed was fraudulent”

may not adequately explain who committed the fraud, what was done, when it was done and how it affected the transaction.

A proper challenge should identify the specific facts relied upon.

What Legal Relief Can Be Sought?

Depending upon the facts, proceedings concerning a disputed Hiba or trust may involve claims for:

Declaration;
Cancellation of a document;
Permanent injunction;
Mandatory injunction;
Possession;
Correction of revenue record;
Setting aside an invalid mutation;
Removal or replacement of a trustee;
Execution of the trust;
Other consequential relief.

The appropriate relief depends upon the transaction, property, parties and stage of the dispute.

How Should a Family Trust or Hiba Be Prepared?

Before creating either arrangement, a property owner should have the following examined:

Property title

Confirm that the person creating the arrangement actually owns the property and has the legal capacity to transfer or settle it.

Beneficiaries

Clearly identify the intended beneficiaries.

Property description

Clearly identify each property, including relevant title, allotment, registration or revenue details.

Intention

The document should accurately reflect the person’s genuine intention.

Capacity and free consent

The transaction should be entered into voluntarily and with legal capacity.

Possession

In Hiba matters, the question of delivery of possession should be properly addressed.

Registration and transfer

Where required, ensure proper registration and transfer of the property.

Tax and regulatory implications

The financial and tax consequences should also be considered before implementation.

Hiba or Trust — Which One Should You Use?

There is no universal answer.

The correct structure depends on what the property owner wants to achieve.

If the intention is to make an immediate lifetime gift to a particular person, Hiba may be relevant.

If the intention is to create a structured arrangement under which property is held and managed for beneficiaries, a trust may be relevant.

If the intention is to dedicate property permanently for a religious or charitable purpose, waqf may need to be considered separately.

The important point is that the legal consequences should be understood before the property is transferred.

Need Legal Assistance With Hiba, Trust or Property Planning?

If you are considering creating a family trust, making a Hiba/gift of property, protecting family assets, transferring property to beneficiaries, or challenging a disputed gift or trust deed, Bukhari, The Legal Guardians & Associates LLP, Islamabad, provides legal assistance in property, inheritance, Hiba, trust, succession and related civil litigation matters. Our lawyers can review the title documents, proposed transaction, family structure and applicable legal requirements and advise on an appropriate legal structure.

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Frequently Asked Questions

Can a Hiba be challenged in Pakistan?

Yes. A Hiba may be challenged where there are legally sustainable grounds such as failure to establish its essential ingredients, fraud, coercion, lack of capacity or other defects.

Is a registered gift deed impossible to challenge?

No. Registration is important evidence, but the underlying validity of the transaction can still be examined by a competent court where a legally recognized challenge is properly established. The Supreme Court’s decision in 2024 SCMR 24 illustrates this point.

Can a father give all his property to one child?

The answer depends on the nature of the transaction and whether it is a valid lifetime transfer. A genuine completed Hiba has different consequences from property remaining in the donor’s estate at death.

Can siblings challenge their father’s Hiba?

They may challenge it where they have a legally sustainable basis and can prove the relevant facts. They do not, however, automatically invalidate a genuine lifetime gift merely because they would otherwise have inherited the property.

Can a family trust be challenged?

Yes. Depending on the facts, questions may arise regarding the validity of its creation, registration, trust property, beneficiaries, unlawful or fraudulent purpose, sham character, breach of trust or other legal defects.

Can a trust be revoked?

The answer depends upon the terms and manner of creation of the trust and the applicable law. For Islamabad, Section 90 of the ICT Trust Act, 2020 sets out circumstances in which a trust may be revoked, including where revocation was expressly reserved or where the statutory requirements concerning beneficiaries’ consent are satisfied.

Conclusion

Hiba and trust are two different legal mechanisms and should not be treated as interchangeable.

A valid Hiba under Muslim law requires the essential elements of declaration, acceptance and delivery of possession, while a trust requires a properly structured relationship involving trust property, purpose, trustee and beneficiary and, in Islamabad, compliance with the Islamabad Capital Territory Trust Act, 2020.

Neither arrangement should be described as absolutely “unchallengeable.” A court can examine allegations of fraud, coercion, lack of capacity, defective creation, absence of essential elements, sham transactions and other legal defects.

For families dealing with substantial property, the most important step is to structure the transaction correctly before execution and transfer, rather than relying on litigation after a dispute has arisen.

Consultation / Creating a Trust Or Hiba

If you are considering creating a family trust for property management, succession planning or the benefit of your spouse, children or other beneficiaries, it is important to structure the arrangement carefully from the beginning. Bukhari, The Legal Guardians & Associates LLP, Islamabad, provides legal consultation and assistance in drafting and structuring trust deeds, identifying trust property and beneficiaries, reviewing title documents, and completing the applicable registration and legal formalities. Our lawyers can assess your specific family and property circumstances and advise on an appropriate legal structure.

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Disclaimer: This article is for general legal information and does not constitute legal advice. The validity of a Hiba, trust or property transfer depends upon the specific documents, facts, title position, applicable personal law and circumstances of each case.