Trust law In common law legal systems, a trust is a relationship whereby property (real or personal, tangible or intangible) is held by one party for the benefit of another. A trust conventionally arises when property is transferred by one party to be held by another party for the benefit of a third party, although it is also possible for a legal owner to create a trust of property without transferring it to anyone else, simply by declaring that the property will henceforth be held for the benefit of the beneficiary. A trust is created by a settlor, who transfers some or all of his property to a trustee, who holds that trust property (also called the principal or corpus) for the benefit of the beneficiaries. The settlor is also called the trustor, grantor, donor, creator, or founder. In the case of the self-declared trust, the settlor and trustee are the same person. The trustee has legal title to the trust property, but the beneficiaries have equitable title to the trust property (separation of control and ownership). The trustee owes a fiduciary duty to the beneficiaries, who are the beneficial owners of the trust property. The trustee may be either a natural person or a legal person (such as a company or a public body), and there may be a single trustee or multiple co-trustees. There may be a single beneficiary or multiple beneficiaries. The settlor may himself be a beneficiary. The trust is governed by the terms under which it was created. The terms of the trust are usually written down in a trust instrument or deed but, in England and Wales, it is not necessary for them to be written down to be legally binding, except in the case of land. The terms of the trust must specify that property is to be transferred into the trust (certainty of subject-matter), and who the beneficiaries will be of that trust (certainty of objects). It may also set out the detailed powers and duties of the trustees (such as powers of investment, powers to vary the interests of the beneficiaries, and powers to appoint new trustees). The trust is also governed by local law. The trustee is obliged to administer the trust in accordance with both the terms of the trust and the governing law. Fiduciary A fiduciary is a legal or ethical relationship of trust between two or more parties. Typically, a fiduciary prudently takes care of money for another person. One party, for example a corporate trust company or the trust department of a bank, acts in a fiduciary capacity to the other one, who for example has funds entrusted to it for investment. In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter. In such a relation good conscience requires the fiduciary to act at all times for the sole benefit and interest of the one who trusts. A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. —Lord Millett, Bristol and West Building Society v Mothew[1] A fiduciary duty[2] is the highest standard of care at either equity or law. A fiduciary (abbreviation fid) is expected to be extremely loyal to the person to whom he owes the duty (the principal): he must not put his personal interests before the duty, and must not profit from his position as a fiduciary, unless the principal consents. In English common law the fiduciary relation is arguably the most important concept within the portion of the legal system known as equity. In the United Kingdom, the Judicature Acts merged the courts of equity (historically based in Englands Court of Chancery) with the courts of common law, and as a result the concept of fiduciary duty also became available in common law courts. When a fiduciary duty is imposed, equity requires a different, arguably stricter, standard of behavior than the comparable tortious duty of care at common law. It is said the fiduciary has a duty not to be in a situation where personal interests and fiduciary duty conflict, a duty not to be in a situation where his fiduciary duty conflicts with another fiduciary duty, and a duty not to profit from his fiduciary position without knowledge and consent. A fiduciary ideally would not have a conflict of interest. It has been said that fiduciaries must conduct themselves at a level higher than that trodden by the crowd[3] and that [t]he distinguishing or overriding duty of a fiduciary is the obligation of undivided loyalty.[4] Natural person In jurisprudence, a natural person is a real human being, as opposed to a legal person, which may be a private (i.e., business entity) or public (i.e., government) organization. In many cases, fundamental human rights are implicitly granted only to natural persons. For example, the Nineteenth Amendment to the United States Constitution, which states a person cannot be denied the right to vote based on gender, or Section Fifteen of the Canadian Charter of Rights and Freedoms, which guarantees equality rights, apply to natural persons only. Another example of the distinction between natural and legal persons is that a natural person can hold public office, but a corporation cannot. A corporation can, however, file a lawsuit or own property as a legal person. Legal personality or Legal Person Legal personality (also artificial personality, juridical personality, legal entity and juristic personality) is the characteristic of a non-living entity regarded by law to have the status of personhood. A legal person (Latin: persona ficta) (also artificial person, juridical person, juristic person, legal entity and body corporate, also commonly called a vehicle) has a legal name and has certain rights, protections, privileges, responsibilities, and liabilities under law, similar to those of a natural person. The concept of a legal person is a fundamental legal fiction. It is pertinent to the philosophy of law, as it is essential to laws affecting a corporation (corporations law) (the law of business associations). Legal personality allows one or more natural persons to act as a single entity (a composite person) for legal purposes. In many jurisdictions, legal personality allows that composite to be considered under law separately from its individual members or shareholders. They may sue and be sued, enter contracts, incur debt, and own property. Entities with legal personality may also be subjected to certain legal obligations, such as the payment of taxes. An entity with legal personality may shield its shareholders from personal liability. The concept of legal personality is not absolute. Piercing the corporate veil refers to looking at the individual natural persons acting as agents involved in a corporate action or decision; this may result in a legal decision in which the rights or duties of a corporation are treated as the rights or liabilities of that corporations shareholders or directors. Generally, legal persons do not have all of the same rights—such as the right to freedom of speech—that natural persons have. The concept of a legal person is now central to Western law in both common-law and civil-law countries, but it is also found in virtually every legal system.[1] Legal fiction A legal fiction is a fact assumed or created by courts[1] which is then used in order to apply a legal rule which was not necessarily designed to be used in that way. For example, the rules of the United Kingdom Houses of Parliament specify that a Member of Parliament cannot resign from office, but since the law also states that a Member of Parliament who is appointed to a paid office of the Crown must either step down or stand for re-election, the effect of a resignation can be accomplished by appointment to such an office. The second rule is used to circumvent the first rule. Legal fictions may be counterintuitive in the sense that one might not normally view a certain fact or idea as established in the course of everyday life, but they are preserved to advance public policy and preserve the rights of certain individuals and institutions. A common example of a legal fiction is a corporation, which is regarded in many jurisdictions as a person who has many of the same legal rights and responsibilities as a natural person. Legal fictions are mostly encountered under common law systems. The term legal fiction is not usually used in a pejorative way, and has been likened to scaffolding around a building under construction.[2] Trustee Trustee (or the holding of a Trusteeship) is a legal term which, in its broadest sense, can refer to any person who holds property, authority, or a position of trust or responsibility for the benefit of another.[1] Although the strictest sense of the term is the holder of property on behalf of a beneficiary,[1] the more expansive sense encompasses persons who serve, for example, on the Board of Trustees for an institution that operates for the benefit of the general public. A trust can be set up either to benefit particular persons, or for any charitable purposes (but not generally for non-charitable purposes): typical examples are a will trust for the testators children and family, a pension trust (to confer benefits on employees and their families), and a charitable trust. In all cases, the trustee may be a person or company, whether or not they are a prospective beneficiary.
Posted on: Thu, 21 Nov 2013 22:53:37 +0000
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