What is a trust, and what are its principal

Discuss the modern utilizations of trusts.

The History of the Trust

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The thought of the trust arose about by chance from the procedural elaboratenesss of English jurisprudence, where a double system of justness had arisen every bit early as the 14th century. The system provided two judicial constructions based on basically different laws of the regulation of jurisprudence and the regulation of equity. The common jurisprudence tribunals administered jurisprudence and the Chancery tribunals provided just alleviation when the application of rigorous jurisprudence in the common jurisprudence tribunals either gave no redress or gave an unfair one. The Chancery tribunals were frequently faced with requests associating to “uses” . A “use” arose where a individual ( the “feoffor” ) conveyed belongings of any kind to another ( the “feofee” ) upon the apprehension that that other was to keep the belongings on behalf of the feoffor or on behalf of a 3rd party (cestui que usage) . Clearly the feofee, edge in honor but beyond the jurisprudence, was in a place of assurance which he might mistreat. Consequently, the rights of thecestui que usagerequired protection. The common jurisprudence tribunals failed to recognize utilizations and so it was upon repeated request to the tribunal of “conscience” that alleviation was awarded by the Chancellor who forced the feofee to administrate the belongings for the benefit of thecestui que usage, harmonizing to the footings of the grant.

The system of utilizations made it possible to avoid some of the feudal burdens incurred when belongings descended to an inheritor. Under feudal jurisprudence, the Godhead was entitled to a payment when an inheritor succeeded to feudal land. This payment could be avoided if the estate was vested in a plurality of feofees, where the normal regulations of joint occupancy would use so that when a feofee died, the other feofees would take by survivorship and the land would ne’er go through to an inheritor. Similarly, in the instance of land left in volitions, which was illegal at common jurisprudence, the legal estate could be vested in feofees and the will covertly made in regard of a good involvement, which once more allowed the turning away of such feudal cases. The system of utilizations was hence favorable towards those at the underside of the feudal hierarchy – the renters – and harmful to those farther up the pyramid – the Godheads. The King, as Godhead of all and renter of none, was the one individual who could deduce no advantage from concealing belongings behind a drape and it is barely surprising that the King of the twenty-four hours, Henry VIII, believed the rule grounds behind the employment of utilizations to be use and secretiveness and in the latter half of his reign took action against what were efficaciously mediaeval equivalents to modern revenue enhancement turning away strategies.

This action came in the signifier of the Statute of Uses 1535 and efficaciously abolished uses wholly. However, in less than a century, the derelict rules of the system of utilizations had been revived to make the modern twenty-four hours trust. For the intents of this essay, the medieval system of utilizations may be treated as an exact opposite number of the modern trust. Thus thecestui que usagehas become acestui que trustor “beneficiary” , while the feofee has become the “trustee” .

Modern Functions of a Trust

Throughout the centuries the trust has proved a unusually resilient and flexible construct. Its utilizations have reflected the demands of the times. In Medieval times it was used as a agency of avoiding forfeiture, while in the Victorian period it was frequently used as a agency of commanding one’s household, even after one’s ain decease. Today, every bit good as retaining its old utilizations, the trust has been put to many new 1s. The modern function of the trust lies significantly in pension financess, charities and assorted gifts.

( I )charitable puposes

A map of the trust construct which has been common for many centuries is its use for charitable intents or for the public good. “Charitable” in English jurisprudence has a proficient and slightly unreal significance, which derives from the significance contained in the Statute of Charitable Uses ( the Statute of Elizabeth ) . To day of the month, no comprehensive definition of a legal “charity” has been provided either by legislative act or by the tribunals. However, there is an recognized if non entirely equal trial. A claim to charitable position is determined by sing whether the intent in inquiry comes within Lord MacNaghten’s categorization, foremost stated in 1891:

‘Charity in its legal sense comprises four rule divisions: trusts for the alleviation of poorness ; trusts for the promotion of instruction ; trusts for the promotion of faith ; and trusts for other intents good to the community’ . [ 1 ]

The accomplishment of charitable intents through the usage of a trust is frequently easier and cheaper than the usage of a charitable corporation, or for the intents to be administered by a local authorization. For these grounds, many established charities today are in fact trusts. One pertinent manner in which such trusts are utilized is in the creative activity of catastrophe financess which accepts financess from members of the populace ( the believers or trustors ) for just distribution amongst the victims, subsisters and dependants of victims, of the catastrophe.

( two )protective trusts

A debtor’s belongings is in rule available for the satisfaction of his creditors and, if he becomes bankrupt, it will go through to his legal guardian in bankruptcy ; but it is possible, by doing usage of a protective trust, to obtain a step of protection against such a catastrophe. The very impression of protective trusts, which efficaciously empowers a colonist to get the better of his creditors by seting his belongings beyond their appreciation, would no doubt hold Henry VIII turning in his grave. However, there is much to be said for leting some agencies of protecting a person’s dependents from the hardships caused by his ain deficiency of fiscal prudence and from this position it is delighting to observe that a colonist can non make a trust which will protect him against himself ain bankruptcy. [ 2 ] InRe Boroughs-Fowler[ 3 ] , a colonist attempted to protect his belongings by making an ante-nuptial colony that provided that the income from the trust should be paid to him and in event of his bankruptcy, paid to his married woman. This was non allowed by the tribunal and it was held that the belongings vested in the bankruptcy legal guardian, who could validly dispose of it. This regulation is now enshrined in the Trustees Act 2000, once the Trustees Act 1925.

( three )pull stringsing control of companies

A trust may be created in order to avoid any individual individual geting a commanding portion of a company. If for some commercial or other ground the original proprietor does non desire another individual or organic structure to get a commanding shareholding in a company, a sufficient figure of portions could be taken out of circulation and put in trust. This method may be used in order to protect a company from a hostile coup d’etat. It should be recognised nevertheless that this process might good hold the consequence of restricting the company’s freedom of tactic, as the trust keeping would be capable both to swear considerations and to commercial 1s, and company determinations would be tightly bound into the public assistance of the trust. [ 4 ]

( four )matrimony trusts

With the increasing incidence of divorce in modern society it is foreseeable that a matrimony will non last a life-time. One manner of avoiding the fiscal statements that constantly embitter the parties to a divorce would be to do proviso for the retention of belongings in trust, with the purpose of spliting it out equitably on the break-up of the matrimony. However, there may be a job in relation to such a provision’s cogency. InRe Johnston’s Will Trusts[ 5 ] a trust was set up which made proviso by a male parent whereby his girl was to have certain amounts in the event of her disassociating her hubby. Clearly, the father’s purpose was to supply for his girl merely if her hubby stopped back uping her ; but the tribunal held that the proviso was null as being contrary to public policy in that it amounted to an encouragement to the girl to disassociate her hubby. In malice of such case in points, it is submitted that such a proviso may be a reasonable manner to cover with an event that is unwanted but foreseeable, so long as it does non promote the oncoming of the unwanted event itself.


The above are a few of the utilizations to which the trust can be put. The illustrations chosen show that the nature of a trust can be protective, of individual or belongings ; it can accomplish desirable purposes, either of a private or charitable assortment ; or it can be distributive, in the sense of reassigning wealth in a revenue enhancement advantageous mode. From a strategic point of position, it is submitted that Maitland’s claim that the trust is “the greatest …achievement performed by Englishmans in the field of jurisprudence” holds sufficient weight. From a moral base point, it is merely stated that Henry VIII’s scruples of the Medieval system would still keep a grade of justness when applied to the modern trust. However, what is of import to observe is that the trust can clearly non be dismissed as holding outlived its utility and today forms a typical portion of English jurisprudence which at the really least says a great trade about the inventiveness of our attorneies.



Bartlett v Barclay’s Bank ( no.1 ) [ 1980 ] 1 All ER 139

Commissioners of Particular Income Tax V Pemsel [ 1891 ] AC 531

Re Boroughs-Fowler [ 1916 ] 2 Ch. 251

Re Johnstone’s Will Trusts [ 1967 ] 1 All ER 553.

Wilson V Greenwood ( 1818 ) 1 Swan. 471


Charities Act 1960

Trustees Act 2000


Hanbury, Harold G. and Maudsley, Ronald H. ,Modern Equity, ( 12Thursdayed. ) , Steven & A ; Sons ( 1985 )

James, Philip S. ,Introduction to English Law,( 11Thursdayed. ) , Butterworths ( 1985 )

Johnston,The Roman Law of Trusts, Clarendon Press, Oxford ( 1988 ) .

Oxford English Law,English Private Law,Vol.I, Oxford University Press ( 2000 ) .


LexisNexis Gateway at www.athens.ac.uk

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