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Thread: Law of Trusts

  1. #1

    Law of Trusts

    My intent for this thread is usage as a learning tool as well as aid to others in understanding trusts at a deeper level: a provision for newbies and non-newbies alike if you will.

    http://en.wikipedia.org/wiki/Trust_law

    In common law legal systems, a trust is a relationship whereby property (including real, tangible and intangible) is managed by one person (or persons, or organizations) for the benefit of another. A trust is created by a settlor (or feoffor to uses), who entrusts some or all of their property to people of their choice (the trustees or feoffee to uses). The trustees hold legal title to 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, cestui que use, or cestui que trust), usually specified by the settlor, who hold equitable title. The trustees owe a fiduciary duty to the beneficiaries, who are the "beneficial" owners of the trust property.

    The trust is governed by the terms of the trust document, which is usually written and occasionally set out in deed form. It is also governed by local law. The trustee is obliged to administer the trust in accordance with both the terms of the trust document and the governing law.

    In the United States, the settlor is also called the trustor, grantor, donor or creator. In some other jurisdictions, the settlor may also be known as the founder.
    History of Trusts

    The trust law developed in England at the time of the Crusades, during the 12th and 13th centuries.

    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, often to pay and receive feudal dues. To achieve this, he would convey ownership of his lands to an acquaintance, on the understanding that the ownership would be conveyed back on 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 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]

    Roman law recognized a similar concept which it referred to as the fideicommissum.[2]

    The waqf is an equivalent institution in Islamic law.

    "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[3]:447 and thereby become a holding company without a "special act of the legislature".[4] Holding companies were used after the restriction on owning other companies' shares was lifted.[3]:447
    Creation and Formalities of Trusts

    Creation

    Trusts may be created by the expressed intentions of the settlor (express trusts) or they may be created by operation of law (resulting trusts).

    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 (often referred to as an inter vivos or "living trust");
    2. an oral declaration;[8]
    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.[9]
    [edit] 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. Subject Matter. The property subject to the trust must be clearly identified (Palmer v Simmonds). One may not, for example, settle "the majority of my estate", as the precise extent cannot be ascertained. Trust property may be any form of specific 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 may 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.
    More to come. Any and all contributions welcome.
    Last edited by shikamaru; 03-27-11 at 02:39 PM.

  2. #2

  3. #3
    There is also the concept of a business trust:
    http://legal-dictionary.thefreedicti...Business+Trust

    An unincorporated business organization created by a legal document, a declaration of trust, and used in place of a corporation or partnership for the transaction of various kinds of business with limited liability.

    The use of a business trust, also called a Massachusetts trust or a common-law trust, originated years ago to circumvent restrictions imposed upon corporate acquisition and development of real estate while achieving the limited liability aspect of a corporation. A business trust differs from a corporation in that it does not receive a charter from the state giving it legal recognition; it derives its status from the voluntary action of the individuals who form it. Its use has been expanded to include the purchase of Securities and commodities.

    A business trust is similar to a traditional trust in that its trustees are given legal title to the trust property to administer it for the advantage of its beneficiaries who hold equitable title to it. A written declaration of trust specifying the terms of the trust, its duration, the powers and duties of the trustees, and the interests of the beneficiaries is essential for the creation of a business trust. The beneficiaries receive certificates of beneficial interest as evidence of their interest in the trust, which is freely transferable.

    In some states, a business trust is subject to the laws of trusts while, in others, the laws of corporations or partnerships govern its existence. The laws of each state in which a business trust is involved in transactions must be consulted to ensure that the trust is treated as an entity whose members have limited liability. If the laws of a particular state consider a business trust to be a partnership, the beneficiaries may be fully liable for any judgments rendered against it. The trustees of a business trust are liable to third parties who deal with the trust unless there is a contract provision to the contrary, since they hold legal title to the trust property and may sue and be sued in actions involving the trust. They may, however, seek indemnity from the trust property and possibly from the beneficiaries.

    The property of a business trust is managed and controlled by trustees who have a fiduciary duty to the beneficiaries to act in their best interests. In many states, the participation of the beneficiaries in the management of the property destroys their limited liability, and the arrangement will usually be treated as a partnership.

    Profits and losses resulting from the use and investment of the trust property are shared proportionally by the beneficiaries according to their interests in the trusts.

    A business trust is considered a corporation for purposes of federal Income Tax and similarly under various state income tax laws.
    There is also this:
    http://en.wikipedia.org/wiki/Joint-stock_company

  4. #4
    Roman law concept analogous to a trust: http://en.wikipedia.org/wiki/Fideicommissum

    The fideicommissum was one of the most popular legal institutions in Roman Law for several centuries. It translates from the Latin word fides (trust) and committere (to commit), meaning that something is committed to one's trust.

  5. #5
    How could this one be forgotten:
    http://en.wikipedia.org/wiki/Use_%28law%29

    Use, as a term in real property law of common law countries, amounts to a recognition of the duty of a person, to whom property has been conveyed for certain purposes, to carry out those purposes.

    Uses were equitable or beneficial interests in land. In early law a man could not dispose of his estate by will nor could religious houses acquire it. As a method of evading the common law arose the practice of making feoffments to the use of, or upon trust for, persons other than those to whom the seisin or legal possession was delivered, to which the equitable jurisdiction of the chancellor gave effect. To remedy the abuses which it was said were occasioned by this evasion of the law the Statute of Uses of 1536 was passed. However it failed to accomplish its purpose. Out of this failure of the Statute of Uses arose the modern law of trusts (see that article for further details).
    Statute of Uses
    http://en.wikipedia.org/wiki/Statute_of_Uses

    The Statute of Uses (27 Hen.8 c.10) was an Act of the Parliament of England that restricted the application of uses in English property law. The Statute was originally conceived by Henry VIII of England as a way to rectify his financial problems by simplifying the law of uses, which moved land outside the royal tax revenue, traditionally gathered through seisin. His initial efforts, which removed uses almost completely, were stymied at the 1529 Parliament by members of the House of Commons, many of whom were landowners (who would lose money) and lawyers (who benefited in fees from the confusing law on uses). Academics disagree on how the Commons were brought around, but an eventual set of bills introduced in 1535 was passed by both the Lords and Commons.

    The eventual bills invalidated all uses that did not impose an active duty on trustees, with the beneficiaries of the use being held as the legal owners of the land, meaning they had to pay tax. The Statute partially led to the Pilgrimage of Grace, and more importantly the development of trusts, but academics disagree as to its effectiveness. While most agree that it was important, with Eric Ives writing that "the effect which its provisions had upon the development of English land law was revolutionary",[1] some say that by allowing uses and devises in certain areas it not only failed to remove the fraudulent element from land law but actively encouraged it.

  6. #6
    Senior Member Michael Joseph's Avatar
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    thank you for this work.

    Real Property is a long way from Real Estate.


    Evolution of the Trust
    The blessing is in the hand of the doer. Faith absent deeds is dead.

    https://www.lawfulmoneytrust.com

    ONE man or woman can make a difference!

  7. #7
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    Who's Survey-Claim do you recognize as first in line in a lien upon it?

    Who is your God?

  8. #8
    Senior Member Michael Joseph's Avatar
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    Quote Originally Posted by motla68 View Post
    Who's Survey-Claim do you recognize as first in line in a lien upon it?

    Who is your God?
    While this post goes right to the nature of Property - Right of Use; it is vague. If I exercise dominion over a horse and break the horse does that mean you get to ride it? You have no Right of Use. Yet the Horse belongs to God. Will you trespass upon my farm animal and USE it for yourself?

    Look at the Scripture - it says do not remove the ancient landmark. Their lots were surveyed out and their lots were their inheritance. The land belongs to God - the Surveyed Lot belongs to Man.
    The blessing is in the hand of the doer. Faith absent deeds is dead.

    https://www.lawfulmoneytrust.com

    ONE man or woman can make a difference!

  9. #9
    Quote Originally Posted by Michael Joseph View Post
    thank you for this work.

    Real Property is a long way from Real Estate.


    Evolution of the Trust
    Real Estate with regard to a fee (or fief).
    http://en.wikipedia.org/wiki/Fee_simple

    In English common law, the Crown has radical title or the allodium of all land in England, meaning that it is the ultimate "owner" of all land. However, the Crown can grant ownership in an abstract entity—called an estate in land—which is what is owned, rather than the land it represents. The fee simple estate is also called "estate in fee simple" or "fee-simple title" and sometimes simply freehold in England and Wales. From the start of the Norman period, when feudalism was introduced to England, the tenant or "holder" of a fief could not alienate it from the possession of his overlord, that is to say sell it, but instead could separate off a parcel of the land and grant it as a subordinate fief to his own sub-tenant, a process known as sub-enfeoffing or "subinfeudation". The 1290 Statute of Quia Emptores abolished subinfeudation and instead allowed the sale of fee simple estates.[1]

    The concept of a "fee" has its origins in feudalism. William Blackstone defined fee simple as the estate in land that a person has when the lands are given to him and his heirs absolutely, without any end or limit put to his estate. Land held in fee simple can be conveyed to whomsoever its owner pleases; it can be mortgaged or put up as security.[2] Owners of real property in fee simple title have the right to own the property during their lifetime and typically have a say in determining who gets to own the property after their death. In a sense, one might say fee simple owners "own" the property "forever"; however, only holders of an allodial title on land really do own the land forever, and land thus held is not subject to property tax.
    Real property is a synonym for land law

    Real property: an introductory explanation of the law relating to land
    http://books.google.com/books?id=-W0...page&q&f=false
    Last edited by shikamaru; 03-27-11 at 02:53 PM.

  10. #10
    Senior Member Michael Joseph's Avatar
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    Exactly it is the Original Survey that conveyed the Original Property Rights into Trust. The Crown as Trustee and the Ownership is just really the Equitable Title upon the CQVT. The CQVT comes from within the Estate and therefore it can be said that there is fee simple within the Estate. But the Estate is held in Trust by the Trustee. Lets now go to LEGAL and LEGAL ESTATE:

    LEGAL. That which is according to law. It is used in opposition to equitable, as the legal estate is, in the trustee, the equitable estate in the cestui que trust. Vide Powell on Mortg. Index, h. t.

    2. The party who has the legal title, has alone the right to seek a remedy for a wrong to his estate, in a court of law, though he may have no beneficial interest in it. The equitable owner, is he who has not the legal estate, but is entitled to the beneficial interest.

    [i believe Motla68 is very interested in [de]finition #2.



    3. The person who holds the legal estate for the benefit of another, is called a trustee; he who has the beneficiary interest and does not hold the legal title, is called the beneficiary, or more technically, the cestui que trust.

    4. When the trustee has a claim, he must enforce his right in a court of equity, for he cannot sue any one at law, in his own name; 1 East, 497; 8 T. R. 332; 1 Saund. 158, n. 1; 2 Bing. 20; still less can he in such court sue his own trustee. 1 East, 497.

    LEGAL ESTATE. One, the right to which may be enforced in a court of law. It is distinguished from an equitable estate, the rights to which can be established only in a court of equity. 2 Bouv. Inst. n. 1688.
    The blessing is in the hand of the doer. Faith absent deeds is dead.

    https://www.lawfulmoneytrust.com

    ONE man or woman can make a difference!

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