Introduction to Law of Trusts

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  • The trust classification may be required in order to prove the existence of the trust and/or to ensure the intentions of the settlor are followed, as well as providing a legal basis for determining disputes should they arise.
  • Introduction to Law of Trusts

    1. 1. 14/06/13 LAW OF TRUST(LAW 3711) 1LAW OF TRUSTSEnglish TrustJapanese TrustChina’s Trust
    2. 2. 14/06/13 LAW OF TRUST(LAW 3711) 2English Trust Pierre Le Paulle ; “The trust is the guardian angel ofAnglo-Saxon, accompanying himeverywhere, impassively, from cradleto grave. (Gerweyn Ll Griffiths The GuardianAngel Spreads Its Wings? Trusts andWhat They Bring to Legal Systems.)
    3. 3. 14/06/13 LAW OF TRUST(LAW 3711) 3 Developed from the concept of use toa more stable and establishedinstitution. Used for variety of reasons. Uniquely British institution.
    4. 4. 14/06/13 LAW OF TRUST(LAW 3711) 44 Essential Elements ofA trust 1) Trust property : the corpus or body 2) The trustee – the person or entity inwhom the corpus is entrusted. 3) Beneficiaries – the persons on whosebehalf the property is managed 4) The Deed or instructions the documentswhich outlines the manner in which the trustproperty is to be dealt with on behalf of thebeneficiaries
    5. 5. 14/06/13 LAW OF TRUST(LAW 3711) 51) Trust property : The corpus or body Specific property – land or personal property Lord Browne- Wilkinson In Westdeutche vIslington London Borough Council [1996] 2All ER 961 at 988 “In order to establish a trust there must beidentifiable trust property”
    6. 6. 14/06/13 LAW OF TRUST(LAW 3711) 62) The trustee The person or entity in whom thecorpus is entrusted Trustees become owners at commonlaw and are given control of theproperty Trust property need to be constitutedin the hand of trustee
    7. 7. 14/06/13 LAW OF TRUST(LAW 3711) 73) Beneficiaries The person who is entitled to the trustproperty. The settlor / trustee may be thebeneficiary or one of the beneficiaries.
    8. 8. 14/06/13 LAW OF TRUST(LAW 3711) 84) The Deed When a person created a trust throughtrust instruments, he is known assettlor. Sometimes, trust can be createdverbally. It can also be created in a will – theperson who created the trust is knownas testator
    9. 9. 14/06/13 LAW OF TRUST(LAW 3711) 9Article 2 of the Hague Convention on the LawApplicable to Trusts On Their Recognition(English Recognition of Trust Act 1987)For the purpose of this Convention, the term ‘trust’refers to the legal relationship created–intervivos or on death- by a person, the settlor,when assets have been placed under the controlof a trustee for The benefit of a beneficiaryor for specified purpose.
    10. 10. 14/06/13 LAW OF TRUST(LAW 3711) 10A trust has the following characteristic;a) The assets constitute a separate fund andare not part of the trustee’s own estateb) Title to the trust assets stands in the name of thetrustee or in the name of another person onbehalf of the trustee;c) The trustee has the power and the duty, in respectof which he is accountable, to manage, employor dispose of the assets in accordancewith the terms of the trust and the special dutiesimposed upon him by law
    11. 11. 14/06/13 LAW OF TRUST(LAW 3711) 11Classification of Trust Many ways to categorize trust. Broadly classified into: Depends on the objectives of the trust.
    12. 12. 14/06/13 LAW OF TRUST(LAW 3711) 12From the point of view ofintent to create trusta) Express or declaredb) Presumed or implied; orc) Constructive trustFrom point of view if theobjects of the trust;a) Private orb) Public or charitable
    13. 13. 14/06/13 LAW OF TRUST(LAW 3711) 13From the point of view of thenature of the duties imposedupon trusteea) Simple orb) SpecialFrom the point of view ofthe form of declarationof trusta) Executed orb) Executory
    14. 14. 14/06/13 LAW OF TRUST(LAW 3711) 14TYPES OF TRUSTPrivate Trust Public TrustExpress TrustConstructiveResultingCharitableNon charitableOffshoreExecuted & ExecutoryCompletely Constituted &Incompletely Constituted
    15. 15. 14/06/13 LAW OF TRUST(LAW 3711) 15Trust and otherconcept. Trust and Bailment Trust and Agency Trust and Contract Trust and Debt Trust and Power.
    16. 16. 14/06/13 LAW OF TRUST(LAW 3711) 16TRUST AND BAILMENTLimited to personal chattel All propertyBailee : no fiduciary duties Trustee : fiduciary dutiesBailor : Legal ownershipBailee: special propertyTrustee: Legal ownershipBeneficiary : Legal OwnershipUnauthorised sale by bailee: nogood titleUnauthorised sale by trustee: tobona fide purchaser : good titleBailment: Goods are delivered to a bailee to he heldfor a particular purpose upon an express/implied conditionthat it will be redelivered to the bailor when the purposehas been carried outBailment Trust
    17. 17. 14/06/13 LAW OF TRUST(LAW 3711) 17TRUST AND AGENCYAgency TrustPersonal right Proprietary rightBased on contractualrelationshipBased on fiduciaryrelationshipAct according to businessagencyAct according to the trustdeed
    18. 18. 14/06/13 LAW OF TRUST(LAW 3711) 18TRUST AND CONTRACTDoctrine of Privity Can be enforced bybeneficiaryPersonal Remedy Proprietary RemedyTerms of contract can bevariedTerms can only be variedunder certain ctcLimitation Period for BOC Limitation Period for BOTContract TrustBased on agreementConsiderationBased on intention
    19. 19. 14/06/13 LAW OF TRUST(LAW 3711) 19Japanese Trust Very different from UK : trust is a legalmedium for property management. In Japan : all property belongs to thefamily : family estate. Properties were also donated forreligious purposes No clear and defined systematic typeof trust in Japan
    20. 20. 14/06/13 LAW OF TRUST(LAW 3711) 20Property management Civil Code of Japan : based on theprinciples of German private law It satisfied every needs for propertyadministration : from family law – to willimplementation No need for introduction of trust Concept of act of trust and ‘trust –like actwere referred to in some court rulings anddiscourse Eg : mortgage-like contract ,a pensionentitlement.
    21. 21. 14/06/13 LAW OF TRUST(LAW 3711) 21Modern trust system First introduced from the middle of the Meijiperiod Can be found in article 9 paragraph 4 ofIndustrial Bank of Japan Act 1900 Later in Secured Bond Trust Act 1905 :concept of trust was put to use for the firsttime Introduced Trust Act 1922 in the Parliament
    22. 22. 14/06/13 LAW OF TRUST(LAW 3711) 22China’s Trust Law Trust business has been in existencefor over 20 years. One of the weakest and leastregulated industries. In 2001, government took steps inintroducing new trust law
    23. 23. 14/06/13 LAW OF TRUST(LAW 3711) 23China’s Trust Law Law of People’s Republic of China onTrusts (“Trust Law”) Adopted on 28thApril 2001 In force on 1stOctober 2001 8 years of hard work by variousgovernment committees. Extensive survey was conducted ontrust law in many jurisdictions.
    24. 24. 14/06/13 LAW OF TRUST(LAW 3711) 24Impact. Enhance China’s further economicdevelopment with respect of manymatters.Eg Corporate Organization Preservation of overseas state assets Individual estate planning NGO –charitable trust.
    25. 25. 14/06/13 LAW OF TRUST(LAW 3711) 25 The trust Law closely follows the trust lawsin Taiwan, Japan and Korea- Anglo-American law of trusts. Embodied many principles found in thecommon law countries. Certain unique principles which areinconsistent with Anglo- American law oftrusts, .
    26. 26. 14/06/13 LAW OF TRUST(LAW 3711) 26 Trust law has assimilated manyprinciples in Anglo- American trust law New principles to China Well drafted but China faces difficulttask in implementing it. It is a borrowed statute.

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