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Trust law - Wikipedia, the free encyclopedia http://en.wikipedia.org/wiki/Trust_(law) Trust law From Wikipedia, the free encyclopedia (Redirected from Trust (law)) In common law legal systems, a trust is a relationship between three parties whereby property (real or personal, tangible or intangible) is transferred by one party to be held by another party for the benefit of a third party. A trust is created by a settlor (archaically known as the feoffor to uses), who transfers some or all of his property to a trustee (archaically known as the feoffee to uses), who holds that trust property (or trust Wills, trusts corpus) for the benefit of the beneficiaries (archaically known and estates as the cestui que use, or cestui que trust). The trustee has legal Part of the common law series title to the trust property, but the beneficiaries have equitable title to the trust property (separation of control and ownership). Wills The trustee owes a fiduciary duty to the beneficiaries, who are Legal history of wills the "beneficial" owners of the trust property. (Note: A trustee Joint wills and mutual wills may be either a natural person, or an entity, and there may be a Will contract · Codicil single trustee or multiple co-trustees. There may be a single Holographic will · Oral will beneficiary or multiple beneficiaries. The settlor may himself be Sections a beneficiary.). Attestation clause The trust is governed by the terms under which it was created. Residuary clause The terms of the trust are most usually written down in a trust Incorporation by reference instrument. The terms of the trust must specify what property is Contest to be transferred into the trust, and who the beneficiaries will be Testamentary capacity of that trust. The trust is also governed by local law. The trustee Undue influence is obliged to administer the trust in accordance with both the Insane delusion · Fraud terms of the trust and the governing law. No-contest clause Property disposition In the United States, the settlor is also called the trustor, grantor, donor or creator. In some other jurisdictions, the settlor may Lapse and anti-lapse also be known as the founder. Ademption · Abatement Satisfaction of legacies Acts of independent significance Contents Elective share · Pretermitted heir Wills and conflict of laws 1 History Trusts 2 Significance 3 Basic principles Express · Resulting 3.1 Creation Constructive 3.2 Formalities Common types 3.3 Trustees Bare · Discretionary 3.4 Beneficiaries 1 of 15 7/20/11 12:04 AM Trust law - Wikipedia, the free encyclopedia http://en.wikipedia.org/wiki/Trust_(law) 4 Purposes Accumulation and Maintenance 5 Types Interest in possession 6 Terms Charitable · Purpose · Incentive 7 Tax and regulation Other types 8 Inter vivos trusts in the United States Protective · Spendthrift 9 Inter vivos trusts in South Africa Life insurance · Remainder 9.1 Parties to the trust Life interest 9.2 Establishing a living trust Reversionary interest 9.3 Asset protection Testamentary 9.4 Tax considerations Honorary · Asset-protection 10 See also Special needs 11 Notes (Supplemental Needs) 12 References Governing doctrines Pour-over will Cy-près doctrine History Trusts and conflict of laws Dishonest assistance Roman law had a well-developed concept of the trust (fideicommissum) in terms of "testamentory trusts" created by Estate administration wills but never developed the concept of the "inter vivos trust" Intestacy · Testator · Probate that applied while the creator was still alive. This was created Power of appointment by later common law jurisdictions. Simultaneous death · Slayer rule Laughing heir · Advancement Personal trust law developed in England at the time of the Disclaimer of interest · Inheritance tax Crusades, during the 12th and 13th centuries.[citation needed] Related topics At the time, land ownership in England was based on the feudal Advance directive (Living will) system. When a landowner left England to fight in the Totten trust Crusades, he needed someone to run his estate in his absence, often to pay and receive feudal dues. To achieve this, he would Other common law areas convey ownership of his lands to an acquaintance, on the Contract · Tort · Property understanding that the ownership would be conveyed back on Criminal law · Evidence his return. However, Crusaders would often return to find the legal owners' refusal to hand over the property. Unfortunately for the Crusader, English law did not recognize his claim. As far as the courts were concerned, the land belonged to the trustee, who was under no obligation to return it. The Crusader had no legal claim. The disgruntled Crusader would then 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 Chancellor would consider it unjust that the legal owner could deny the claims of the Crusader (the "true" owner). Therefore, he would find in favor of the returning Crusader. Over time, it became known that the Lord Chancellor's court (the Court of Chancery) would continually recognize the claim of a returning Crusader. The legal owner would hold the land for the benefit of the original owner, and 2 of 15 7/20/11 12:04 AM Trust law - Wikipedia, the free encyclopedia http://en.wikipedia.org/wiki/Trust_(law) 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. Also, the Primogeniture system could be considered as a form of trust. In Primogeniture system, the first born male inherited all the property and "usually assumes the responsibility of trusteeship of the property and of adjudicating attendant disputes." [1] The waqf is an equivalent institution in Islamic law, restricted to charitable trusts. "Antitrust law" emerged in the 19th century when industries created monopolistic trusts by entrusting their shares to a board of trustees in exchange for shares of equal value with dividend rights; these boards could then enforce a monopoly. However, trusts were used in this case because a corporation could not own other companies' stock[2]:447 and thereby become a holding company without a "special act of the legislature".[3] Holding companies were used after the restriction on owning other companies' shares was lifted.[2]:447 Significance The trust is widely considered to be the most innovative contribution to the English legal system.[4] 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. France, for example, recently added a similar though-not-quite-comparable notion to its own law with la fiducie,[5] which was modified in 2009;[6] la fiducie, unlike the trust, is a contract. Trusts are recognized internationally under the Hague Convention on the Law Applicable to Trusts and on their Recognition which also regulates conflict of trusts. Although trusts are often associated with intrafamily wealth transfers, they have become very important in American capital markets, particularly through pension funds (essentially always trusts) and mutual funds (often trusts).[2] Basic principles Property of any sort may be held on trust, but growth assets are more commonly placed into trust (for tax and estate planning benefits). The uses of trusts are many and varied. Trusts may be created during a person's life (usually by a trust instrument) or after death in a will. In a relevant sense, a trust can be viewed as a generic form of a corporation where the settlors (investors) are also the beneficiaries. This is particularly evident in the Delaware business trust, which could theoretically, with the language in the "governing instrument", be organized as a cooperative corporation, limited liability corporation, or perhaps even a nonprofit corporation.[2]:475–6 One of the most significant aspects of trusts is the ability to partition and shield assets from the trustee, multiple beneficiaries, and their respective creditors (particularly the trustee's creditors), making it "bankruptcy remote", and leading to its use in pensions, mutual funds, and asset securitization.[2] 3 of 15 7/20/11 12:04 AM Trust law - Wikipedia, the free encyclopedia http://en.wikipedia.org/wiki/Trust_(law) Creation Trusts may be created by the expressed intentions of the settlor (express trusts) or they may be created by operation of law known as implied trusts. Implied trusts is one created by a court of equity because of acts or situations of the parties. Implied trusts are divided into two categories resulting and constructive. A resulting trust is implied by the law to work out the presumed intentions of the parties, but it does not take into consideration their expressed intent. A constructive trust is a trust implied by law to work out justice between the parties, regardless of their intentions. Typically a trust can be created in the following ways: 1. a written trust instrument created by the settlor and signed by both the settlor and the trustees (often referred to as an inter vivos or "living trust"); 2. an oral declaration;[7] 3. the will of a decedent, usually called a testamentary trust; or 4. a court order (for example in family proceedings). In some jurisdictions certain types of assets may not be the subject of a trust without a written document.[8] Formalities Generally, a trust requires three certainties, as determined in Knight v Knight: 1. Intention. There must be a clear intention to create a trust (Re Adams and the Kensington Vestry) 2.
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