Trust Law in repoducible terms = Mathematics

[Michael Joseph]

ab initio

A trust may be defined as a fiduciary relationship in which one person holds a property interest, subject to an equitable obligation to keep or use that interest for the benefit of another.

The significance of the phrase "fiduciary relationship" is explained in greater detail in subsequent sections of this treatise dealing with the duties of the trustee and with constructive trusts. It will become apparent that a fiduciary relation is one in which the law demands of one party an unusually high standard of ethical or moral conduct with reference to another.


The trustee, like the executor, the guardian, or the agent, and similar parties, owes the one whom he represents a duty to act solely in the interest of the beneficiary; he is not permitted to consider his own personal advantage. The ethics of ordinary business relations, where parties oppose each other at arm's length, do not apply to the trust. On account of the intimate nature of the relationship, the great control of the trustee over the property of his beneficiary, the origin of the trust institution in the court of equity, and for other reasons, the trustee is expected to show more than ordinary candor, consideration, and probity in his dealings with the beneficiary.

The basic elements of a viable trust are as follows:

The trust property or res is the interest in property, real or personal, tangible or intangible, which the trustee holds, subject to the rights of another.


It should first be noted that an interest in property is always an element of the trust. In certain relations persons only, or persons and any property, may be involved, for example, in agency, where A may be the agent of P for the performance of personal services, which have no connection with any property, or no connection with any particular property. But the trust presupposes described, ascertained or ascertainable property, a defined interest in which is to be owned or held by the trustee. What may be the trust property and how it may become such are matters to be dealt with later. The trust property is sometimes called the trust res, the corpus, the capital, the subject or the subject matter of the trust.

The settlor of a trust is the person who intentionally causes it to come into existence. He is often called the trustor, grantor, founder, donor, or creator of the trust. Where the trust is created by will the creator is the testator.

The trustee is the individual or entity (often an artificial person such as a corporation) which holds the trust property for the benefit of another.

It is sometimes said that the legal title to the trust property is always in the trustee. His title is usually legal, but it may be equitable if the settlor expresses the intent to give him such an interest and has the capacity to do so. Thus if the settlor has a fee simple estate in certain lands, and conveys his interest to A to hold in trust for B, A, the trustee, will be seised of the legal estate. However, if the settlor has merely contracted to buy land for which he has paid the purchase price, and the settlor transfers his interest in the land to A in trust for B, A, the trustee, will hold merely the equitable title of the contract vendee of the land under a specifically enforceable contract. It is because of this possibility of legal or equitable ownership that the definition given above merely states that the trustee is a titleholder, without regard to the court in which his title will be recognized. In the great majority of trusts the trustee has the legal title to the trust property.

The beneficiary or cestui que trust is the person for whose benefit the trust property is held by the trustee. In the case of private trusts he is an individual but the beneficiary can be an artificial legal entity such as a corporation. As shown later, the beneficiary of a charitable trust is the public, or a substantial class thereof, and not the institutions or individuals who obtain and administer benefits from the trust.

Thus there are three requirements to create a valid private trust. These are (1) an expression of intent that property be held, at least in part, for the benefit of one other than the settlor; (2) at least one beneficiary for whom the property is to be administered by the trustee; and (3) an interest in property which is in existence or is ascertainable and is to be held for the benefit of the beneficiary. The requirement of a trustee to administer the trust does not mean that a trust will not come into existence where no trustee is named. A trust does not fail at its inception or thereafter for lack of a trustee since the court will appoint a trustee to administer the trust property for the benefit of the beneficiary.


The trustee holds the trust property "for the benefit of" the beneficiary. These advantages usually come to the beneficiary through investments made by the trustee that cause the property to produce income, and in the distribution of income and principal of the trust. In rare cases the beneficiary may be allowed to enjoy the property directly. It does not matter how the benefits are to come to the beneficiary. The important trust concept is that he has a right to obtain them.

The duty of the trustee is enforceable by the beneficiary whether or not he was a party to the act of trust creation or any promise was made by the trustee to him. In this respect the law of trusts differs from the law of contracts where there have been some holdings that not all third party beneficiary contracts are enforceable.

The trustee's obligation is "equitable." Originally it was recognized only by the English court of chancery, which administered the rules and applied the principles of equity. Some who have defined the trust have made enforceability in a court of chancery or equity a part of their definition. But in the present state of the law it is preferable to define the trustee's obligation as equitable, and to omit any reference to the court in which it may be enforced. In England and most American states the separate court of chancery has been abolished, and both legal and equitable obligations are enforced by the same court. However, in a few states the separate court of equity has been maintained. The trustee's obligation is based on equitable principles, whether enforced by a court having both legal or probate and equitable jurisdiction, or by a court having solely equitable functions. In rare instances the trustee's obligation is treated as legal and enforced in a legal action.

Whether the right which the beneficiary has is a property right in the subject matter of the trust (a right in rem), or merely a personal right against the trustee (a right in personam), is a question much debated.

In most cases there are at least three parties connected with the trust, namely, a settlor, a separate legal entity acting as trustee, and one or more third persons who are the beneficiaries. But where the settlor declares himself a trustee, settlor and trustee are one and the same person and a trust may exist with only two parties. Since one cannot be under an obligation to himself, the same individual cannot be settlor, trustee and sole beneficiary, and the trust parties can never be less than two. However a sole trustee may be one of a number of beneficiaries, and one of several joint trustees may be the sole beneficiary.

The trust instrument is the document, whether a deed, agreement or will, in which the settlor or testator expresses an intent to have a trust and sets forth the trust terms, that is, the details as to beneficiaries and their rights and the duties and powers of the trustee. In some cases trusts are created without a writing and hence there is no trust instrument as such. In such a case the terms of the trust are determined by evidence of the settlor's intent, to the extent the evidence is not barred by reason of the Statute of Frauds or the parol evidence rule.

Trusts are classified with respect to the manner of their origin. Where based upon the expressed intent of the settlor they are called express trusts; when they come into existence because of presumed or inferred intent they are given the name of resulting trusts; and when they are created by court action in order to work out justice, without regard to the intent of the parties, they are denominated constructive trusts. The two latter classes of trusts, according to the orthodox view, were grouped together under the heading of implied trusts and this terminology is still used. But the logic of this classification has been subject to criticism. There has been disagreement as to the meaning of "implied" in this connection. The Restatement of Trusts abandoned the phrase "implied trust".