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Encyclopedia > Trust law
The Law of Wills, Trusts and Inheritance
Part of the common law series
Wills
Wills  · Holographic will
Joint wills and mutual wills  · Will contract
Codicils
Parts of a Will
Attestation clause  · Residuary clause
Incorporation by reference
Contesting a Will
Testamentary capacity  · Undue influence
Insane delusion  · Fraud
Problems of property disposition
Lapse and anti-lapse
Ademption  · Abatement
Acts of independent significance
Elective share  · Pretermitted heir
Trusts
The Law of Trusts
Generic Terms:
Express trust  · Constructive trust
Resulting trust
Common Types of Trust:
Bare trust · Discretionary trust
Accumulation and Maintenance trust
Interest in Possession trust
Charitable trust
Purpose trust
Other Specific Types of Trust:
Protective trust  · Spendthrift trust
Life insurance trust  · Remainder trust
Life interest trust  · Reversionary interest trust
Honorary trust  · Asset-protection trust
Special needs trust: (general)/(U.S.)
Doctrines governing trusts
Pour-over will  · Cy pres doctrine
Other related topics
Living Wills (advance directives)
Inheritance
Intestacy  · Testator  · Probate
Power of appointment
Simultaneous death  · Slayer rule
Disclaimer of interest
Other areas of the Common Law
Contract law  · Tort law  · Property law
Criminal law  · Evidence

In common law legal systems, a trust is an arrangement whereby money or property is owned and managed by one person (or persons, or organizations) for the benefit of another. A trust is created by a settlor, who entrusts some or all of his property to people of his choice (the trustees). The trustees are the legal owners of the trust property (or trust corpus), but they are obliged to hold the property for the benefit of one or more individuals or organizations (the beneficiary, a.k.a. cestui que use or cestui que trust), usually specified by the settlor. The trustees owe a fiduciary duty to the beneficiaries, who are the "beneficial" owners of the trust property. This article or section seems not to be written in the formal tone expected of an encyclopedia entry. ... Image File history File links This is a lossless scalable vector image. ... Lady Justice or Justitia is a personification of the moral force that underlies the legal system (particularly in Western art). ... This article needs additional references or sources for verification. ... This article or section does not adequately cite its references or sources. ... This article concerns the common-law legal system, as contrasted with the civil law legal system; for other meanings of the term, within the field of law, see common law (disambiguation). ... This article needs additional references or sources for verification. ... This article needs additional references or sources for verification. ... A holographic will is a will and testament that has been entirely handwritten and signed by the testator. ... -1... A will contract is a term used in the law of wills describing a contract to exchange a current performance for a future bequest. ... A codicil is a document that amends, rather than replaces, a previously executed will. ... This article needs additional references or sources for verification. ... In the statutory law of wills and trusts, an attestation clause is a clause that is typically appended to a will, often just below the place of the testators signature. ... A residuary estate, in the law of wills, is any portion of the testators estate that is not specifically devised to someone in the will, or any property that is part of such a specific devise that fails. ... Incorporation by reference is a doctrine of the common law of wills by which a person may state in his will that certain property is to be disposed of by a seperate document, describing the place where the document will be found. ... A will contest, in the law of property, is a formal objection raised against the validity of a will, based on the contention that the will does not reflect the actual intent of the testator (the party who made the will). ... In the common law tradition, testamentary capacity is the legal term of art used to describe a persons legal and mental ability to make a valid will. ... Undue influence (as a term in jurisprudence) is an equitable doctrine that involves one person taking advantage of a position of power over another person. ... An insane delusion is the legal term of art in the common law tradition used to describe a false conception of reality that a testator of a will adheres to against all reason and evidence to the contrary. ... Lapse and anti-lapse are complementary concepts under the law of wills, which address the disposition of property that is willed to someone who dies before the testator (the writer of the will). ... Ademption is a term used in the law of wills to determine what happens when property bequested under a will is no longer in the testators estate when the testator dies. ... Abatement (derived through the French abattre, from the Late Latin battere, to beat), a beating down or diminishing or doing away with; a term used especially in various legal phrases. ... The doctrine of acts of independent significance, in the common law of wills, permits the testator to effectively change the disposition of her property without changed her will, if acts or events with relation to the property itself have some significance beyond avoiding the requirements of the will. ... An elective share is a term used in American law relating to inheritance, which describes a proportion of an estate which the surviving spouse of the deceased may claim in place of what they were left in the decedents will. ... A pretermitted heir is a term used in the law of property to describe a person who would likely stand to inherit under a will, except that the testator (the person who wrote the will) did not know or did not know of the party at the time the will... Where property is passed to a person but no gift is made, it is held for the owner, this is the Resulting trust; where property should for some reason of public policy or fairness or rule of Equity be held for someone other than the legal owner, this is either... A trust is a legal relationship where one person, the trustee, holds assets for the benefit of another person (the beneficiary). ... A resulting trust is a type of implied trust created through implication of law where the actions of the parties involved and the nature of the transaction implies an intention to create a trust. ... A bare trust is one in which the beneficiary has a right to both income and capital and may call for both to be remitted into their own name, they are also entitled to take actual ownership and control of the trust property. ... A discretionary trust[1] is a trust where the beneficiaries and/or their entitlements to the trust fund are not fixed, but are determined by the criteria set out in the trust instrument by the settlor. ... This law-related article does not cite its references or sources. ... An interest in possession trust is the most common example of a life interest trust. ... A charitable trust is a trust established for charitable purposes. ... A purpose trust is a kind of trust which has no beneficiaries, but instead exists for advancing some non-charitable purpose of some kind. ... The Protective Trust is a form of settlement found in England and Wales and several Commonwealth countries. ... A spendthrift trust is a trust that is created for the benefit of a person who is in debt (often because they are unable to control their spending) that gives an independent trustee full authority to make decisions as to how the trust funds may be spent for the benefit... In the U.S., proper ownership of life insurance is important if the insurance proceeds are to escape federal estate taxation. ... An honorary trust, under the law of trusts, is a device by which a person establishes a trust for which there is neither a charitable purpose, nor a private beneficiary to enforce the trust. ... An asset-protection trust is a term which covers a wide spectrum of legal structures. ... Special Needs Trusts are created to ensure that beneficiaries who are developmentally disabled or mentally ill can receive inheritances without losing access to essential government benefits. ... Please wikify (format) this article as suggested in the Guide to layout and the Manual of Style. ... In common law legal systems, a trust is a contractual relationship in which a person or entity (the trustee) has legal title to certain property (the trust property or trust corpus), but is bound by a fiduciary duty to exercise that legal control for the benefit of one or more... A pour-over will is a testamentary device wherein the writer of a will creates a trust, and decrees in the will that the property in his estate at the time of his death shall be placed in the trust. ... This article or section does not cite its references or sources. ... A living will, also called will to live, advance health directive, or advance health care directive, is a specific type of power of attorney or health care proxy or advance directive. ... Intestacy is the condition of the estate of a person who dies owning property greater than the sum of his or her enforceable debts and funeral expenses without having made a valid will or other binding declaration; alternatively where such a will or declaration has been made, but only applies... A testator is a person who has made a legally binding will or testament, which specifies what is to be done with that persons penis family and/or property after death. ... Probate is the legal process of settling the estate of a deceased person; specifically, resolving all claims and distributing the decedents property. ... A power of appointment is a term most frequently used in the law of wills to describe the ability of the testator (the person writing the will) to select a person who will be given the authority to dispose of certain property under the will. ... Simultaneous death is a problem of inheritence which occurs when two people (usually a husband and wife) die at the same time in an accident. ... The slayer rule, in the common law of inheritance, is a doctrine that prohibits inheritence by a person who murders someone from whom they stand to inherit. ... Disclaimer of interest (also called a renunciation), in the law of inheritance, wills and trusts, is a term that describes an attempt by a person to renounce their legal right to benefit from an inheritance (either under a will or through intestacy) or through a trust. ... A contract is any promise or set of promises made by one party to another for the breach of which the law provides a remedy. ... In the common law, a tort is a civil wrong for which the law provides a remedy. ... This article or section does not cite any references or sources. ... Criminal law (also known as penal law) is the body of statutory and common law that deals with crime and the legal punishment of criminal offenses. ... The law of evidence governs the use of testimony (e. ... This article concerns the common-law legal system, as contrasted with the civil law legal system; for other meanings of the term, within the field of law, see common law (disambiguation). ... In law a settlor is a person who settles property on express trust for the benefit of beneficiaries. ... The word trustee is a legal term that refers to a member of a trust, which can be set up for any of a variety of purposes, and is entrusted with the administration of property on behalf of others. ... In trust law, a beneficiary or cestui que use, is the person or persons who are entitled to the benefit of any trust arrangement. ... The court of chancery, which governed fiduciary relations prior to the Judicature Acts The fiduciary duty is a legal relationship between two or more parties, most commonly a fiduciary or trustee and a principal or beneficiary, that in English common law is arguably the most important concept within the portion...


The trust is governed by the terms of the trust document, which is usually written and in deed form. It is also governed by local law. An English deed written on fine parchment or vellum with seal tag dated 1638. ...


In the United States, the settlor is also called the trustor, grantor, donor, or creator. In law a settlor is a person who settles property on express trust for the benefit of beneficiaries. ...

Contents

History

Trusts developed in England at the time of the Crusades, during the 12th and 13th Centuries. This article is about historical Crusades . ...


At the time, land ownership in England was based on the feudal system. When a landowner left England to fight in the Crusades, he needed someone to run his estate in his absence; to pay and receive feudal dues, for example. To achieve this, he would convey his lands to a friend, on the understanding that the land would be conveyed back on his return. However, crusaders would often return to find the legal owners less than willing to hand over the property. Feudalism comes from the Late Latin word feudum, itself borrowed from a Germanic root *fehu, a commonly used term in the Middle Ages which means fief, or land held under certain obligations by feodati. ...


Unfortunately for the crusader, English law did not recognise his claim. As far as the courts were concerned, the land belonged to the friend (or, more likely, former friend), and he was under no obligation to return it. The crusader had no legal claim.


The disgruntled crusader would petition the king, who would refer the matter to his Lord Chancellor. The Lord Chancellor could do what was "just" and "equitable", and had the power to decide a case according to his conscience. At this time, the principle of equity was born. The Lord High Chancellor of Great Britain, or Lord Chancellor and prior to the Union the Chancellor of England and the Lord Chancellor of Scotland, is a senior and important functionary in the government of the United Kingdom, and its predecessor states. ... The Court of Chancery, London, early 19th century This article is about the concept of equity in the jurisprudence of common law countries. ...


The Lord Chancellor would consider it unjust that the legal owner could deny the claims of the crusader (the "true" owner). Therefore, he would find in favour of the returning crusader. Over time, it became known that the Lord Chancellor's court (the Court of Chancery) would continually recognise the claim of a returning crusader. The legal owner would hold the land for the benefit of the original owner, and would be compelled to convey it back to him when requested. The crusader was the "beneficiary" and the friend the "trustee". The term use of land was coined, and in time developed into what we now know as a trust.


Roman law recognised a similar concept that it referred to as the fidei-commissa.[1] Ordinary Magistrates Extraordinary Magistrates Titles and Honors Emperor Politics and Law Roman law is the legal system of ancient Rome. ...


It has been suggested[2] that the crusaders adapted the concept from the Islamic waqf. Sharia (Arabic شريعة also Sharia, Shariah or Syariah) is traditional Islamic law. ... A waqf (Arabic: , plural Arabic: , awqāf; Turkish: ) is an inalienable religious endowment in Islam, typically devoting a building or plot of land for Muslim religious or charitable purposes. ...


Significance

The trust is widely considered to be the most innovative contribution to the English legal system.[3] Today, trusts play a significant role in all common law systems, and their success has led some civil law jurisdictions to incorporate trusts into their civil codes. Trusts are recognised internationally under the Hague Convention on the Law Applicable to Trusts and on their Recognition which also regulates conflict of trusts.11 English law is a formal term of art that describes the law for the time being in force in England and Wales. ... This article concerns the common-law legal system, as contrasted with the civil law legal system; for other meanings of the term, within the field of law, see common law (disambiguation). ... Civil law or continental law is the predominant system of law in the world. ... A civil code is a systematic compilation of laws designed to comprehensively deal with the core areas of private law. ... The Hague Convention of the Law Applicable to Trusts and on their Recognition was signed on 1 July 1985 but came into force on 1 January 1992. ... In Conflict of Laws, the Hague Convention on the Law Applicable to Trusts and on Their Recognition was concluded on 1 July 1985 and entered into force 1 January 1992. ...


Basic principles

Property of any sort can be held on trust. The uses of trusts are many and varied. Trusts can be created during a person's life (usually by a trust instrument) or after death in a Will. A trust instrument (also sometimes called a deed of trust, where executed by way of deed) is an instrument in writing executed by a settlor used to constitute a trust. ... Look up will in Wiktionary, the free dictionary. ...


Creation

Trusts can be created by written document (express trusts) or they can be created by implication (implied trusts). Where property is passed to a person but no gift is made, it is held for the owner, this is the Resulting trust; where property should for some reason of public policy or fairness or rule of Equity be held for someone other than the legal owner, this is either...


Typically a trust is created by one of the following:

  1. a written trust document created by the settlor and signed by both the settlor and the trustees;
  2. an oral declaration;[4]
  3. the will of the settlor; or
  4. a court order (for example in family proceedings).

In some jurisdictions certain types of assets cannot be the subject of a trust without a written document.[5] A trust instrument (also sometimes called a deed of trust, where executed by way of deed) is an instrument in writing executed by a settlor used to constitute a trust. ... This article needs additional references or sources for verification. ...


Formalities

Generally, a trust requires three certainties, as determined in Knight v Knight: Knight v Knight (1840) 3 Beav 148 is a landmark case in English equity law. ...

  1. Intention. There must be a clear intention to create a trust (Re Adams and the Kensington Vestry)
  2. Subject Matter. The property subject to the trust must be clearly identified (Palmer v Simmonds). One cannot, for example, settle "the majority of my estate", as the precise extent cannot be ascertained. Trust property can be any form of property, be it real or personal, tangible or intangible. It is often, for example, real estate, shares or cash.
  3. Objects. The beneficiaries of the trust must be clearly identified, or at least be ascertainable (Re Hain's Settlement). In the case of discretionary trusts, where the trustees have power to decide who the beneficiaries will be, the settlor must have described a clear class of beneficiaries (McPhail v Doulton). Beneficiaries can include people not born at the date of the trust (for example, "my future grandchildren"). Alternatively, the object of a trust could be a charitable purpose rather than specific beneficiaries.

This article does not cite any references or sources. ... Personal property is a type of property. ... Tangible property in law is, literally, anything which can be touched, and includes both real property (or, in civil law systems, immovable property) and personal property (or moveable property), and stands in distinction to intangible property. ... Intangible property, also known as incorporeal property, describes something which a person or corporation can have ownership of and can transfer ownership of to another person or corporation, but has no physical substance. ... McPhail v Doulton [1971] AC 424 was a landmark decision of the House of Lords in the law of trusts. ...

Trustees

The trustee can be either a person or a legal entity such as a company. There can be multiple trustees, in which case the trust should provide a mechanism for the trustees to make decisions. A trust generally will not fail solely for want of a trustee; if there is no trustee, whoever has title to the trust property will be considered the trustee. A court may appoint a trustee if necessary. In jurisprudence, a natural person is a human being perceptible through the senses and subject to physical laws, as opposed to an artificial person, i. ... A juristic person is a legal fiction through which the law allows a group of natural persons to act as if it were a single composite individual for certain purposes. ... Look up company in Wiktionary, the free dictionary. ...


The trustees will be the legal owners of the trust property. They can, for example, sign bank transactions, make investments or rent out a house (if part of the trust property). By default, being a trustee is an unpaid job. However, in modern times trustees are often lawyers or other professionals who cannot afford to work for free. Therefore, often a trust document will state specifically that trustees are entitled to reasonable payment for their work.


A trust can be created without the trustees having any knowledge of its existence. However, it is usual for the settlor to make arrangements with potential trustees (for example, friends or a professional) before creating the trust.


Beneficiaries

The beneficiaries are beneficial (or equitable) owners of the trust property. Either immediately or eventually, they will receive income from the trust property or they will receive the property itself. The extent of an individual beneficiary's interest depends on the wording of the trust document. One beneficiary may be entitled to income (for example, interest from a bank account), whereas another may be entitled to the entirety of the trust property when he turns 25. The settlor has much discretion when creating the trust, subject to limitations imposed by law.


Types of trusts

In the United Kingdom, five main types of trust have developed:

  • Interest in possession trust. Interest in possession trusts (sometimes called "life interest trusts") are often created as part of wills and are structured in such a way that the surviving spouse, or "life tenant", will have a right to receive an income for the rest of his or her life, or for a fixed period at least.
  • Accumulation and Maintenance trust. "A&M" trusts arose in the 1970s because of changes to UK tax law. They exist for young beneficiaries and give the trustees discretion to pay money for their benefit. Until recently they have enjoyed special tax treatment, but the Finance Act 2006 changed this.
  • Discretionary trust. Trustees of a discretionary trust can often choose the beneficiaries, based on a "class" specified by the settlor. Alternatively, they may have a fixed group of beneficiaries to choose from, but they can decide which beneficiaries (if any) are to benefit and to what extent, so long as the decision is based on the beneficiaries' best interests.
  • Bare trust. Where there is a bare trust, the trustees can deal with the property as usual but the beneficiaries have an absolute right to demand any or all of the property at any time. The trustees are therefore mere agents of the beneficiaries. In the USA the term simple trust is used (see below).
  • Charitable trust. Charitable trusts have a unique position in English law. They have special tax advantages, they do not have to end after a certain period of time (unlike other types of trusts), they will not be void if their objects are uncertain. They encourage charitable giving.

An interest in possession trust is the most common example of a life interest trust. ... This law-related article does not cite its references or sources. ... A discretionary trust[1] is a trust where the beneficiaries and/or their entitlements to the trust fund are not fixed, but are determined by the criteria set out in the trust instrument by the settlor. ... A bare trust is one in which the beneficiary has a right to both income and capital and may call for both to be remitted into their own name, they are also entitled to take actual ownership and control of the trust property. ... A charitable trust is a trust established for charitable purposes. ...

Purposes

The most common purposes for trusts are as follows:

  1. Privacy. Trusts may be created purely for privacy. The terms of a will are public and the terms of a trust are not. In some families this alone makes use of trusts ideal.
  2. Spendthrift Protection. Trusts may be used to protect one's self against one's own inability to handle money. It is not unusual for an individual to create an inter vivos trust with a corporate trustee who may then disburse funds only for causes articulated in the trust document. These are especially attractive for spendthrifts. In many cases a family member or friend has prevailed upon the spendthrift/settlor to enter into such a relationship.
  3. Wills and Estate Planning. Trusts frequently appear in wills (indeed, technically, the administration of every deceased's estate is a form of trust). A fairly conventional will, even for a comparatively poor person, often leaves assets to the deceased's spouse (if any), and then to the children equally. If the children are under 18, or under some other age mentioned in the will (21 and 25 are common), a trust must come into existence until the contingency age is reached. The executor of the will is (usually) the trustee, and the children are the beneficiaries. The trustee will have powers to assist the beneficiaries during their minority.
  4. Charities. In some common law jurisdictions all charities must take the form of trusts. In others, corporations may be charities also, but even there a trust is the most usual form for a charity to take. In most jurisdictions, charities are tightly regulated for the public benefit (in the UK, for example, by the Charity Commission).
  5. Unit Trusts. The trust has proved to be such a flexible concept that it has proved capable of working as an investment vehicle: the unit trust.
  6. Pension Plans. Pension plans are typically set up as a trust, with the employer as settlor, and the employees and their dependents as beneficiaries.
  7. Corporate Structures. Complex business arrangements, most often in the finance and insurance sectors, sometimes use trusts among various other entities (e.g. corporations) in their structure.
  8. Asset Protection. The principle of "asset protection" is for a person to divorce himself or herself personally from the assets he or she would otherwise own, with the intention that future creditors will not be able to attack that money, even though they may be able to bankrupt him or her personally. One method of asset protection is the creation of a discretionary trust, of which the settlor may be the protector and a beneficiary, but not the trustee and not the sole beneficiary. In such an arrangement the settlor may be in a position to benefit from the trust assets, without owning them, and therefore without them being available to his creditors. Such a trust will usually preserve anonymity with a completely unconnected name (e.g. "The Teddy Bear Trust"). The above is a considerable simplification of the scope of asset protection. It is a subject which straddles ethical boundaries. Some asset protection is legal and (arguably) moral, while some asset protection is illegal and/or (arguably) immoral.
  9. Tax Planning. The tax consequences of doing anything using a trust are usually different from the tax consequences of achieving the same effect by another route (if, indeed, it would be possible to do so). In many cases the tax consequences of using the trust are better than the alternative, and trusts are therefore frequently used for tax avoidance. For an example see the "nil-band discretionary trust", explained at Inheritance Tax (United Kingdom).
  10. Tax Evasion. In contrast to tax avoidance, tax evasion is the illegal concealment of income from the tax authorities. Trusts have proved a useful vehicle to the tax evader, as they tend to preserve anonymity, and they divorce the settlor and individual beneficiaries from ownership of the assets. This use is particularly common across borders — a trustee in one country is not necessarily bound to report income to the tax authorities of another. This issue has been addressed by various initiatives of the OECD.
  11. Money Laundering. The same attributes of trusts which attract legitimate asset protectors also attract money launderers. Many of the techniques of asset protection, particularly layering, are techniques of money-laundering also, and innocent trustees such as bank trust companies can become involved in money-laundering in the belief that they are furthering a legitimate asset protection exercise, often without raising suspicion. See also Anti Money Laundering and Financial Action Task Force on Money Laundering.
  12. Co-ownership. Ownership of property by more than one person is facilitated by a trust. In particular, ownership of a matrimonial home is commonly effected by a trust with both partners as beneficiaries and one, or both, owning the legal title as trustee.

This article needs additional references or sources for verification. ... A corporation (usually known in the United Kingdom and Ireland as a company) is a legal entity (distinct from a natural person) that often has similar rights in law to those of a Civil law systems may refer to corporations as moral persons; they may also go by the name... The Charity Commission is the non-ministerial government department that regulates registered charities (and hence to some extent most churches) in England and Wales. ... A unit trust is a form of collective investment constituted under a trust deed. ... This article does not cite any references or sources. ... Employment is a contract between two parties, one being the employer and the other being the employee. ... Employment is a contract between two parties, one being the employer and the other being the employee. ... Asset protection refers to a set of legal techniques for protecting ones belongings against lawsuits and judgments. ... This article is about law in society. ... A moral is a one sentence remark made at the end of many childrens stories that expresses the intended meaning, or the moral message, of the tale. ... Morality is a complex of principles based on cultural, religious, and philosophical concepts and beliefs, by which an individual determines whether his or her actions are right or wrong. ... This article contrasts tax avoidance, tax evasion, tax mitigation, tax fraud, tax resistance and tax protesters. ... In the United Kingdom, Death Duty was first introduced as a tax on estates in England and Wales over a certain value from 1796, then called legacy, succession and estate duties. ... The Organization for Economic Co-operation and Development (OECD) is an international organization of those developed countries that accept the principles of representative democracy and a free market economy. ... A trust company has been referred to as a near-bank; while technically it differs from a bank in mandate and services offered, it also provides banking services such as chequing accounts, savings and loans, investments and credit cards. ... A term mainly used in the finance and legal industries to describe the act of performing due diligence, by conforming to regulations that require financial institutions and other regulated entities to have proof of a customers identity and that the use, source and destination of funds do not involve money... The Financial Action Task Force on Money Laundering (FATF), also known by the French name Groupe daction financière sur le blanchiment de capitaux (GAFI), is an inter-governmental body founded in 1989 by the G8. ... Ownership is the socially supported power to exclusively control and use for ones own purposes, that which is owned. ...

Society of Trust and Estate Practitioners

The international professional association for the trust industry is STEP, the Society of Trust and Estate Practitioners. Its members place the letters TEP after their names. STEP (The Society of Trust and Estate Practitioners) is the professional body for workers in the trust industry and the (often overlapping) field of estate administration. ...


Terminology

  • Appointment. In trust law, "appointment" often has its everyday meaning. It is common to talk of "the appointment of a trustee", for example. However, "appointment" also has a technical trust law meaning, either:
    • the act of appointing (i.e. giving) an asset from the trust to a beneficiary (usually where there is some choice in the matter — such as in a discretionary trust); or
    • the name of the document which gives effect to the appointment.
The trustee's right to do this, where it exists, is called a power of appointment. Sometimes, a power of appointment is given to someone other than the trustee, such as the settlor, the protector, or a beneficiary.
  • Constructive trust. Unlike an express or implied trust, a constructive trust is not created by an agreement between a settlor and the trustee. A constructive trust is imposed by the law as an "equitable remedy." This generally occurs due to some wrongdoing, where the wrongdoer has acquired legal title to some property and cannot in good conscience be allowed to benefit from it. A constructive trust is, essentially, a legal fiction. For example, a court of equity recognizing a plaintiff's request for the equitable remedy of a constructive trust may decide that a constructive trust has been "raised" and simply order the person holding the assets to the person who rightfully should have them. The constructive trustee is not necessarily the person who is guilty of the wrongdoing, and in practice it is often a bank or similar organisation.
  • Express trust. An express trust arises where a settlor deliberately and consciously decides to create a trust, over his or her assets, either now, or upon his or her later death. In these cases this will be achieved by signing a trust instrument, which will either be a will or a trust deed. Almost all trusts dealt with in the trust industry are of this type. They contrast with resulting and constructive trusts. The intention of the parties to create the trust must be shown clearly by their language or conduct. For an express trust to exist, there must be certainty to the objects of the trust and the trust property. In the USA Statute of Frauds provisions require express trusts to be evidenced in writing if the trust property is above a certain value, or is real estate.
  • Fixed trust. In a fixed trust, the entitlement of the beneficiaries is fixed by the settlor. The trustee has little or no discretion. Common examples are:
    • a trust for a minor ("to x if she attains 21");
    • a life interest ("to pay the income to x for her lifetime"); and
    • a remainder ("to pay the capital to y after the death of x")
  • Hybrid trust. A hybrid trust combines elements of both fixed and discretionary trusts. In a hybrid trust, the trustee must pay a certain amount of the trust property to each beneficiary fixed by the settlor. But the trustee has discretion as to how any remaining trust property, once these fixed amounts have been paid out, is to be paid to the beneficiaries.
  • Implied trust. An implied trust, as distinct from an express trust, is created where some of the legal requirements for an express trust are not met, but an intention on behalf of the parties to create a trust can be presumed to exist. A resulting trust may be deemed to be present where a trust instrument is not properly drafted and a portion of the equitable title has not been provided for. In such a case, the law may raise a resulting trust for the benefit of the grantor (the creator of the trust). In other words, the grantor may be deemed to be a beneficiary of the portion of the equitable title that was not properly provided for in the trust document.
  • Incentive trust. A trust that uses distributions from income or principal as an incentive to encourage or discourage certain behaviors on the part of the beneficiary. The term "incentive trust" is sometimes used to distinguish trusts that provide fixed conditions for access to trust funds from discretionary trusts that leave such decisions up to the trustee.
  • Inter vivos trust. A settlor who is living at the time the trust is established creates an inter vivos trust.
  • Irrevocable trust. In contrast to a revocable trust, an irrevocable trust is one which will not come to an end until the terms of the trust have been fulfilled.
  • Offshore trust. Strictly speaking, an offshore trust is a trust which is resident in any jurisdiction other than that in which the settlor is resident. However, the term is more commonly used to describe a trust in one of the jurisdictions known as offshore financial centers or, colloquially, as tax havens. Offshore trusts are usually conceptually similar to onshore trusts in common law countries, but usually with legislative modifications to make the more commercially attractive by abolishing or modifying certain common law restrictions. By extension, "onshore trust" has come to mean any trust resident in a high-tax jurisdiction.
  • Private and public trusts. A private trust has one or more particular individuals as its beneficiary. By contrast, a public trust (also called a charitable trust) has some charitable end as its beneficiary. In order to qualify as a charitable trust, the trust must have as its object certain purposes such as alleviating poverty, providing education, carrying out some religious purpose, etc. The permissible objects are generally set out in legislation, but objects not explicitly set out may also be an object of a charitable trust, by analogy. Charitable trusts are entitled to special treatment under the law of trusts and also the law of taxation.
  • Protective trust. Here the terminology is different between the UK and the USA:
    • In the UK, a protective trust is a life interest which terminates on the happening of a specified event such as the bankruptcy of the beneficiary or any attempt by him to dispose of his interest. They have become comparatively rare.
    • In the USA, a protective trust is a type of trust that was devised for use in estate planning. (In another jurisdiction this might be thought of as one type of asset protection trust.) Often a person, A, wishes to leave property to another person B. A however fears that the property might be claimed by creditors before A dies, and that therefore B would receive none of it. A could establish a trust with B as the beneficiary, but then A would not be entitled to use of the property before they died. Protective trusts were developed as a solution to this situation. A would establish a trust with both A and B as beneficiaries, with the trustee instructed to allow A use of the property until they died, and thereafter to allow its use to B. The property is then safe from being claimed by A's creditors, at least so long as the debt was entered into after the trust's establishment. This use of trusts is similar to life estates and remainders, and are frequently used as alternatives to them.
  • Protector. A protector may be appointed in an express, inter vivos trust, as a person who has some control over the trustee — usually including a power to dismiss the trustee and appoint another. The legal status of a protector is the subject of some debate. No-one doubts that a trustee has fiduciary responsibilities. If a protector also has fiduciary responsibilities then the courts — if asked by beneficiaries — could order him or her to act in the way the court decrees. However, a protector is unnecessary to the nature of a trust — many trusts can and do operate without one. Also, protectors are comparatively new, while the nature of trusts has been established over hundreds of years. It is therefore thought by some that protectors have fiduciary duties, and by others that they do not. The case law has not yet established this point.
  • Purpose trust. Or, more accurately, non-charitable purpose trust (all charitable trusts are purpose trusts). Generally, the law does not permit non-charitable purpose trusts outside of certain anomalous exceptions which arose under the eighteenth century common law (and, arguable, Quistclose trusts). Certain jurisdictions (principally, offshore jurisdictions) have enacted legislation validating non-charitable purpose trusts generally.
  • Resulting trust. A resulting trust is a form of implied trust which occurs where (1) a trust fails, wholly or in part, as a result of which the settlor becomes entitled to the assets; or (2) a vountary payment is made by A to B in circumstances which do not suggest gifting. B becaomes the resulting trustee of A's payment.
  • Revocable trust. A trust of this kind can be "revoked" (cancelled) by its settlor at any time. Revocable trusts are common outside the USA, but (for tax reasons) they are usually only used in situations where the settlor or a major beneficiary has a USA connection.
  • Secret trust. A post mortem trust constituted externally from a will but imposing obligations as a trustee on one, or more, legatees of a will.
  • Simple trust. This term is only used in the USA, but in that jurisdiction has two distinct meanings:
    • In a simple trust the trustee has no active duty beyond conveying the property to the beneficiary at some future time determined by the trust. This is also called a bare trust. All other trusts are special trusts where the trustee has active duties beyond this.
    • A simple trust in Federal income tax law is one in which, under the terms of the trust document, all net income must be distributed on an annual basis.
  • Special trust. In the USA, a special trust contrasts with a simple trust (see above).
  • A Spendthrift trust is a trust put into place for the benefit of a person who is unable to control their spending. It gives the trustee the power to decide how the trust funds may be spent for the benefit of the beneficiary.
  • Testamentary trust or Will Trust. A trust created in an individual's will is called a testamentary trust. Because a will can become effective only upon death, a testamentary trust is generally created at or following the date of the settlor's death.
  • Trustee. One who is responsible for a trust.
  • Unit trust. A unit trust is a trust where the beneficiaries (called unitholders) each possess a certain share (called units) and can direct the trustee to pay money to them out of the trust property according to the number of units they possess. A unit trust is a vehicle for collective investment, rather than disposition, as the person who gives the property to the trustee is also the beneficiary.[6]

A power of appointment is a term most frequently used in the law of wills to describe the ability of the testator (the person writing the will) to select a person who will be given the authority to dispose of certain property under the will. ... A trust is a legal relationship where one person, the trustee, holds assets for the benefit of another person (the beneficiary). ... A trust is a legal relationship where one person, the trustee, holds assets for the benefit of another person (the beneficiary). ... Where property is passed to a person but no gift is made, it is held for the owner, this is the Resulting trust; where property should for some reason of public policy or fairness or rule of Equity be held for someone other than the legal owner, this is either... Look up will in Wiktionary, the free dictionary. ... The statute of frauds refers to a requirement in many common law jurisdictions that certain kinds of contracts, typically contractual obligations, be done in writing. ... Income, generally defined, is the money that is received as a result of the normal business activities of an individual or a business. ... This article is about a city that serves as a center of government and politics. ... In American estate planning parlance, an incentive trust is a trust designed to encourage or discourage certain behaviors by using distributions of trust income or principal as an incentive. ... An inter vivos trust is an express trust created by the settlor during his lifetime, as distinguished from a testamentary trust which arises upon the testators death, usually under his will. ... An offshore trust is simply a conventional trust that is formed under the laws of an offshore jurisdiction. ... Residency is a stage of postgraduate medical training in North America which leads to eligibility for board certification in a primary care or referral specialty. ... An offshore financial centre (or OFC), although not precisely defined, is usually a low-tax, lightly regulated jurisdiction which specialises in providing the corporate and commercial infrastructure to facilitate the use of that jurisdiction for the formation of offshore companies and for the investment of offshore funds. ... A tax haven is a place where certain taxes are levied at a low rate or not at all. ... A charitable trust is a trust established for charitable purposes. ... Asset protection refers to a set of legal techniques for protecting ones belongings against lawsuits and judgments. ... A life estate, is a term used in common law to describe the ownership of land for the duration of a persons life. ... This article or section may be confusing or unclear for some readers, and should be edited to rectify this. ... In trust law, a protector is a person appointed under the trust instrument to direct or restrain the trustees in relation to their administration of the trust. ... The court of chancery, which governed fiduciary relations prior to the Judicature Acts The fiduciary duty is a legal relationship between two or more parties, most commonly a fiduciary or trustee and a principal or beneficiary, that in English common law is arguably the most important concept within the portion... Case law (precedential law) is the body of judge-made law and legal decisions that interprets prior case law, statutes and other legal authority -- including doctrinal writings by legal scholars such as the Corpus Juris Secundum, Halsburys Laws of England or the doctinal writings found in the Recueil Dalloz... A purpose trust is a kind of trust which has no beneficiaries, but instead exists for advancing some non-charitable purpose of some kind. ... A Quistclose trust is a specific type of trust in common law jurisdictions which arises in relation to sums which are advanced by way of credit to a person for the that persons own use, but for a specific purpose. ... Whilst there is no precise definition of what amounts to an Offshore Financial Centre (or OFC), the term is usually meant to refer to low-tax, lightly regulated jurisdictions which specialise in providing the corporate and commercial infrastructure to facilitate the use of those jurisdictions for the formation of offshore... A resulting trust is a type of implied trust created through implication of law where the actions of the parties involved and the nature of the transaction implies an intention to create a trust. ... A secret trust is a trust which arises when property is left to a person (the legatee) under a will on the understanding that they will hold the property as trustee for the benefit of beneficiaries who are not named in the will. ... A bare trust (sometimes referred to as a simple trust) is one in which the beneficiary has a right to both income and capital and may call for both to be remitted into their own name, they are also entitled to take actual ownership and control of the trust property. ... A spendthrift trust is a trust that is created for the benefit of a person who is in debt (often because they are unable to control their spending) that gives an independent trustee full authority to make decisions as to how the trust funds may be spent for the benefit... A testamentary trust is trust which arises upon the death of the testator, usually under his will. ... This article needs additional references or sources for verification. ... This article or section does not adequately cite its references or sources. ... A unit trust is a form of collective investment constituted under a trust deed. ... A collective investment scheme is a way of investing money with other people to participate in a wider range of investments than may be feasable for a individual investor and to share the costs of doing so. ... Lady Justice or Justitia is a personification of the moral force that underlies the legal system (particularly in Western art). ... Administrative law in the United States often relates to, or arises from, so-called independent agencies- such as the Federal Trade Commission (FTC). Here is FTCs headquarters in Washington D.C. Administrative law (or regulatory law) is the body of law that arises from the activities of administrative agencies... Criminal law (also known as penal law) is the body of statutory and common law that deals with crime and the legal punishment of criminal offenses. ... A contract is a legally binding exchange of promises or agreement between parties that the law will enforce. ... Tort is a legal term that means a civil wrong, as opposed to a criminal wrong, that is recognized by law as grounds for a lawsuit. ... This article or section does not cite any references or sources. ... The Court of Chancery, London, early 19th century This article is about the concept of equity in the jurisprudence of common law countries. ... International law deals with the relationships between states, or between persons or entities in different states. ... Conflict of laws, or private international law, or international private law is that branch of international law and interstate law that regulates all lawsuits involving a foreign law element, where a difference in result will occur depending on which laws are applied as the lex causae. ... Supranational law is a form of international law, based on the limitation of the rights of sovereign nations between one another. ... Image File history File links This is a lossless scalable vector image. ... Lady Justice or Justitia is a personification of the moral force that underlies the legal system (particularly in Western art). ... Labour law (American English: labor) or employment law is the body of laws, administrative rulings, and precedents which addresses the legal rights of, and restrictions on, working people and their organizations. ... Human rights law is a system of laws, both domestic and international which is intended to promote human rights. ... Legal procedure is the body of law and rules used in the administration of justice in the court system, including such areas as civil procedure, criminal procedure, appellate procedure, administrative procedure, labour procedure, and probate. ... The law of evidence governs the use of testimony (e. ... Nationality law is the branch of a countrys legal system wherein legislation, custom and court precendent combine to define the ways in which that countrys nationality and citizenship are transmitted, acquired or lost. ... Family Law was a television drama starring Kathleen Quinlan as a divorced lawyer who attempted to start her own law firm after her lawyer husband took all their old clients. ... This article needs additional references or sources for verification. ... Commercial law or business law is the body of law which governs business and commerce and is often considered to be a branch of civil law and deals both with issues of private law and public law. ... Corporations law or corporate law is the law concerning the creation and regulation of corporations. ... For the 2006 film, see Intellectual Property (film). ... The following analysis is based on English law. ... Restitution is the name given to a form of legal relief in which the plaintiff recovers something from the defendant that belongs, or should belong, to the plaintiff. ... Tax law is the codified system of laws that describes government levies on economic transactions, commonly called taxes. ... Bank regulations are a form of government regulation which subject banks to certain requirements, restrictions and guidelines, aiming to uphold the soundness and integrity of the financial system. ... It has been suggested that this article or section be merged with antitrust. ... Consumer protection is a form of government regulation which protects the interests of consumers. ... Environmental law is a body of law, which is a system of complex and interlocking statutes, common law, treaties, conventions, regulations and policies which seeks to protect the natural environment which may be affected, impacted or endangered by human activities. ... Admiralty law (also referred to as maritime law) is a distinct body of law which governs maritime questions and offenses. ... Military law is a distinct legal system to which members of armed forces are subject. ... Product liability encompasses a number of legal claims that allow an injured party to recover financial compensation from the manufacturer or seller of a product. ... This article concerns the common-law legal system, as contrasted with the civil law legal system; for other meanings of the term, within the field of law, see common law (disambiguation). ... Civil law or continental law is the predominant system of law in the world. ... In the religious sense, law can be thought of as the ordering principle of reality; knowledge as revealed by God defining and governing all human affairs. ... It has been suggested that this article or section be merged with Socialist Legality. ... To meet Wikipedias quality standards, this article or section may require cleanup. ... This article is about law in society. ... Legal history is a term that has at least two meanings. ... Philosophers of law ask what is law? and what should it be? Jurisprudence is the theory and philosophy of law. ... Law and economics, or economic analysis of law is an approach to legal theory that applies methods of economics to law. ... An approach to law stressing the actual social effects of legal institutions, doctrines, and practices and vice versa. ... Lady Justice or Justitia is a personification of the moral force that underlies the legal system (particularly in Western art). ... The Politics series Politics Portal This box:      In law, the judiciary or judicial is the system of courts which administer justice in the name of the sovereign or state, a mechanism for the resolution of disputes. ... A legislature is a type of representative deliberative assembly with the power to adopt laws. ... The Politics series Politics Portal This box:      This article is about the sociological concept. ... A lawyer is a person licensed by the state to advise clients in legal matters and represent them in courts of law and in other forms of dispute resolution. ... The Politics series Politics Portal This box:      Civil society is composed of the totality of voluntary civic and social organizations and institutions that form the basis of a functioning society as opposed to the force-backed structures of a state (regardless of that states political system) and commercial institutions. ...

References

  1. ^ Although this was a bequest in a law. Roman law never employed a concept equivalent of the inter vivos trust later seen in common law jurisdictions.
  2. ^ Hudson, A. (2003). Equity and Trusts, 3rd ed., London: Cavendish. ISBN 1-85941-729-9. , p.32
  3. ^ Roy Goode, Commercial Law (2nd ed.)
  4. ^ See for example T Choithram International SA and others v Pagarani and others [2001] 2 All ER 492
  5. ^ For example, in England, trusts over land must be evidenced in writing under s.56 of the Law of Property Act 1925
  6. ^ Kam Fan Sin, The Legal Nature of the Unit Trust, Clarendon Press, 1998.

This article needs additional references or sources for verification. ... An inter vivos trust is an express trust created by the settlor during his lifetime, as distinguished from a testamentary trust which arises upon the testators death, usually under his will. ... Sir Royston Miles Roy Goode (born April 6, 1933) is a preeminent academic commercial lawyer in the United Kingdom. ... T Choithram International SA v Pagarani and Others [2001] 2 All ER 492 was a decision of the Privy Council on appeal from the British Virgin Islands in relation to the vesting of trust property in a trustee. ...

See also

In specific jurisdictions

  • United States trust law
  • Trust law in Civil law jurisdictions
  • Australian trust law
  • Trust law in England and Wales

This article does not cite any references or sources. ... This article does not cite any references or sources. ... This article does not cite any references or sources. ... This article does not cite any references or sources. ...

External links

 * Sample Trust Agreements and Wills 

Misc


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