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Introduction To The Law of Trust

This document provides an introduction to trusts and discusses some key definitions. It explains that a trust involves separating legal ownership (held by the trustee) from equitable ownership (held by the beneficiary). The trustee owes a fiduciary duty to act in the best interest of the beneficiary. A trust requires identifiable property to be transferred to a trustee to hold and manage for beneficiaries. Trusts can be created during a settlor's lifetime or upon their death and can involve different types of property.

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137 views9 pages

Introduction To The Law of Trust

This document provides an introduction to trusts and discusses some key definitions. It explains that a trust involves separating legal ownership (held by the trustee) from equitable ownership (held by the beneficiary). The trustee owes a fiduciary duty to act in the best interest of the beneficiary. A trust requires identifiable property to be transferred to a trustee to hold and manage for beneficiaries. Trusts can be created during a settlor's lifetime or upon their death and can involve different types of property.

Uploaded by

Khandokar Al WASI
Copyright
© © All Rights Reserved
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INTRODUCTION TO THE

LAW OF TRUST
INTRODUCTION
• Many attempts have been made to define the term “trust”, but none
as yet have been wholly successful. A trust is, therefore, easier to
describe than to define. Although trusts come in a variety of forms
and cater for different types of property and purpose, they all share
the same essential characteristics. At its heart, a trust involves the
fragmentation of legal title (legal ownership) and equitable title
(beneficial ownership). The legal title is vested in a character known
as the “trustee” and the trustee holds the trust property on behalf of
the “beneficiary”.
Continuation
• It is only on this separation of title that equitable title assumes
importance because the general rule is that the legal title carries with
it all rights.
• The existence of a trust is dependent upon identifiable property
(whether tangible or intangible) being transferred from its legal owner
to one or more trustees to hold and manage property for the benefit of
ascertainable beneficiaries. The trust may be created inter vivos (i.e.
during the lifetime of the settlor) or may be post-mortem/testamentary
(i.e. on the death of the settlor).
Continuation
• The trustee owes a “fiduciary” duty (i.e. a duty of utmost good faith) to both the
settlor and the beneficiary. The entitlement of the beneficiaries will normally be
set out in the document creating the trust (the “trust instrument”), but where
this is not the case the rights of the beneficiaries can be implied by equity.
• Trusts can be of any sort of property: land, money, chattels, cheque and debts,
etc.
• In general terms, therefore, a trust is either a self-imposed obligation or an
obligation imposed on a third party (in whom legal title to the property becomes
vested) to act for the benefit of another which is enforceable in equity.
• The equitable interest in the property thereby becoming different and distinct
from the nominal legal ownership vested in the trustee.
Definitions of Trust: (1) Halsbury’s Laws of Malaysia:-

• Meaning of “trust”: Where a person has property or rights which he


holds or is bound to exercise for or on behalf of another or others, or
for the accomplishment of some particular or particular purposes, he is
said to hold property or rights in trust for the other or those others, or
for that purpose or those purposes, and he is called a trustee. A trust is
a purely equitable obligation and is enforceable in the High Court.
(2) Maitland:-

• ‘I should define a trust in some way as the following- When a person


has rights which he is bound to exercise upon behalf of another or for
the accomplishment of some particular purpose he is said to have
those rights in trust for that other and for that purpose and he is called
a trustee’.
Pettit
• A trust is an equitable obligation, binding a person (who is called a
trustee) to deal with property over which he has control (which is
called the trust property) either for the benefit of persons (who is
called beneficiaries or cestui que trust) of whom he may himself be
one, and any one of whom may enforce the obligation, or for a
charitable purpose, which may be enforced at the instance of the
Attorney-General or for some other purpose permitted by law though
unenforceable
Keeton
• All that can be said of a trust... is that it is the relationship which
arises whenever a person called trustee is compelled in Equity to hold
property, whether real or personal, and whether by legal or equitable
title, for the benefit of some persons (of whom he may be one and
who are termed as cestui que trust) or for some object permitted by
law, in such a way that the real benefit of the property accrues, not to
the trustees, but to the beneficiaries or other objects of the trust’
• In Bangladesh Trust Law is known as Trust Act 1882.
•Thank You

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