Trust law

A trust is a legal sense created by a person 's lifetime or in case of death right relationship when assets segregated for the benefit of a beneficiary or for a specific purpose and the bound management of Trustees has been assumed.

The Trust Law governs the rights and obligations of persons acting within the Trust. The definition of what constitutes a trust is inherently difficult, " Like an elephant, a trust is difficult to describe but easy to recognize".

The Trust 's how it was developed by courts of equity, justice ( equity) in the countries of the common law and adopted in other countries, with some modifications, a unique legal institution.

• 4.1 Task of the people involved in the Trust 4.1.1 settlor
• 4.1.2 trustee
• 4.1.3 beneficiaries
• 4.1.4 Protector

History

The Trust Law and the Trust itself originated in England during the 12th and 13th century during the Crusades. The origin should be in the feudal era.

The feudal landowners, who took part in a crusade, needed a suitable and reliable administrator of the goods during his absence, which also had an adequate representation and available power. This was regulated under a legal relationship by the feudal landowners their property transferred to a trustee ( Trustee ) with the bond pad to transfer this property after his return back to the former owners back. The institutions participating in the crusade previous owner of the goods has been the beneficiary ( Beneficiary ) from the arrangement. As a trustee, a good friend of the feudal lord was preferably used.

English law ( common law ) knew at that time, however, no legally enforceable right ( writs ) for restitution of property due to such a legal relationship. Therefore denied the trustee the retransfer of the property, so this could not sue the previous owner ( beneficiary ). With a petition to the Lord Chancellor ( Court of Chancery ) the former owner could achieve that, nevertheless, a decision was made fairly and lawfully. This was the origin of equity jurisdiction in English law.

The original purpose of the trust has dissolved over the centuries by the family legal basis and the Trust can be found today in many forms again.

Peculiarities of the Trust

The Trust is a legally autonomized assets without, however, to obtain legal personality (see also the independent trust companies in Liechtenstein ).

The trustee may sue in his capacity as trustee or be sued. Due to the qualification of the Trust as a separate fund by the trustee, there is also:

• That the personal creditors of the trustee can take no access to the trust assets;
• That the trust assets in the event of the insolvency or bankruptcy of the trustee is not part of the assets of the trustee;
• That the trust assets not part of the marital assets of the estate or the trustee is;
• That the trust assets may be out required if the trustee in breach of the obligations arising out of the Trust assets of the trust mingled with his personal assets or assets of the Trust sold illegally. The rights and obligations of a third party who has the trust assets in his possession, however, remain under the determined by the conflict of law rules of the State of the court seised law.

Similar legal constructs in other jurisdictions

Similarly, the Trust found and can also be found in other jurisdictions such exclusive right relationships. So for example:

• In Roman Law and the Familienfideikommiss
• The Waqf in Islamic Law and
• In the inheritance of the Civil Code for the estate, which the non-exempt provisional heir has acquired (§ § 2100 et seq BGB).

Purpose

The purpose of the trust may be general in nature or involve favoring certain people.

Persons acting in Trust

Task of the people involved in the Trust

Settlor

The settlor (also trustor, grantor, donor or creator, in other national jurisdictions also founder ) is the person who made ​​possible by the provision of an estate, a trust.

The settlor can not create or constitute a revocable ( revocable ) an irrevocable trust ( irrevocable ) Trust. With a revocable trust the settlor remains the access to the trust assets received.

Depending on the legal system according to which the Trust is built and regulation in the trust instrument, the settlor can after the establishment of the Trust continues to have a right to the administration or not. After the Anglo-Saxon notion of a trust the settlor standing after the founding principle to no management or control rights.

Trustee

The trustee must manage the power and the duty the trust assets in accordance with the trust provisions and the obligations imposed upon him by the law of specific obligations to use or to dispose of it. The trustee is the acceptance of the obligation under the Trust Deed to the formal owner of the trust assets.

The obligation of the trustee to manage the trust assets in accordance with the Trust provisions, its main obligation. At this obligation is to align and measure the actions of the trustees. The Trustee has therefore fully accountable for his activities. If the trust assets under or it is lost to the Trustee, the Beneficiary may request the return of appropriate assets to the trust under certain circumstances.

The fact that the founder of certain rights and powers reserves or that the trustee itself has rights as a beneficiary, the existence of a trust is not necessarily opposed.

The trustee is primarily committed to the beneficiaries after the establishment of the Trust and has basically true not those of the settlor.

Due to the elimination of all Trustees of the Trust is not, unless the settlor has expressly provided in the Trust Deed that only a very specific trustee can be used.

Beneficiaries

The beneficiary is the beneficiary of the trust person. The benefit may already be done with the transfer of assets or even only with the death of the settlor.

The settlor may himself or any other person or entity to use as a beneficiary.

The claim of the beneficiary ( beneficiary title ) depends on both the rightful benefits from the trust assets as well as on the due administration of the trust by the trustees or the. The right to information about the conditions in the trust against the trustee are generally entitled to all the beneficiaries. An exclusion to report or accounting obligations is not permitted. Under certain circumstances, however, a time limit given if the beneficiaries are not yet individualized ( blackhole trust).

The Beneficiary is the claim of the Trust Deed or recognition of the claim by the trustee to the material owner of the trust assets.

Protector

The Protector is appointed by the settlor to monitor compliance with the obligations of the Trustee under the Trust Deed ( Trust Deed ). The powers of the Protector must be carried out in the Trust Deed in detail.

Trust deed

The Trust deed ( Trust Deed ) be signed by the settlor. This transfer of assets is held and therein are the basic rules on the management and conservation of value of the trust assets for the benefit of the beneficiaries used.

The Trust Agreements ( Trust Document ), which are the beneficiaries disclose on request include in principle, all documents that are required to enable the beneficiaries the control of the trustee.

From the Trust Deed, the Letter of Wishes can be distinguished.

Letter of Wishes

The settlor may be in a separate document its intentions in respect of the establishment of the Trust, the mandate of the trustee, write down the behavior of the beneficiaries etc.. This letter of wishes are not legally binding, but serve the trustee to interpret the trust instrument in line with the wishes of the settlor.

As the Trust Agreements are also in principle to lay open letter of wishes to the beneficiaries, provided that they are legally relevant. However, it is sometimes considered acceptable if the settlor expressly preclude such disclosure.

Rule Against Perpetuities

Due to the Rule Against Perpetuities is to be prevented, that there is long term trusts to asset accumulation, whereby such property is the economic cycle or longer term largely withdrawn (similar Fideikommisse ). The Rule Against Perpetuities thus limits the possibility to build a trust in the longer period of time. Thereafter, the trust assets must be distributed to the beneficiaries (except of the Rule Against Perpetuities, certain charitable trusts).

However, the Rule Against Perpetuities does not apply to Liechtenstein law. This is partially derived in the doctrine that a organized under Liechtenstein law Trust in Anglo-Saxon can not be legally justified (must ), as an essential precondition for the effectiveness of the Trust in the Anglo- Saxon world is ignored.

Law applicable to the Trust Law

The trust shall be in principle chosen by the founder (national) law. Thus, the choice of law effective state, it must be expressly or clearly demonstrated by the terms of the instrument creating. Where necessary, an indistinct choice under the circumstances is to be interpreted.

The national law governs the validity of the trust, the effective transfer of the trust assets in the Trust, the interpretation of the trust instrument, the effects and the management of the Trust. In particular:

Can the applicable (national) law does not also been chosen determined by interpretation, the trust shall be the law of the nation-state, with which it is most closely connected. In the study of law with which the trust is most closely connected, may be considered:

• The place of administration of the trust, as he was called by the settlor;
• The situs of the trust assets;
• The place of habitual residence or the branch of Trustees;
• The objects of the trust and the places where they are to be met.

A state or its courts and authorities can basically leave the Trust or provisions of a trust ignored if the application of these provisions, public order ( ordre public ) contradicts.

Conditions for the establishment of legally binding Express Trusts

Principle for the validity of the establishment of the express trusts must necessarily be present three requirements:

• The will (intention ) of the Trust 's founder has clearly expressed come ( Certainty of Intention )
• Specifying which objects should belong to the trust assets ( Certainty of subject matter )
• Accurate determination of the beneficiaries or traceable to a specific limitation of persons ( Certainty of beneficiaries ).

Manifestations of the trust ( examples)

In Anglo-Saxon countries, there are a variety of forms of trusts, which were supplemented by the acquisition of other jurisdictions even further. In addition, partially different names are used without differentiating deeper for very similar trusts. The manifestations of the Trust also overlap varied. Austin W. Scott has found this: the number of purposes for Which trusts can be created is as unlimited as the imagination of the lawyers.

• Asset protection trust ( through the Asset Protection Trust to the assets protected from creditors and beneficiaries will receive the previously used ).
• Blind Trust (For a blind trust, the beneficiaries are not initially known, and later can also get new symptoms ).
• Complex trust the trustee may distribute the trust in Complex existing or newly added assets in the trust or collect a tax year and beyond. The Complex trust can also be made to charitable purposes. The tax deduction for charitable gifts is usually permitted ( Compare: " Simple trust" ).
• Constructive trust ( Arises when a person is entitled to a fortune or this takes possession under certain circumstances and to the outside is seen that this person holds the assets for others. The Constructive Trust arises regularly without trust deed or last will, but in fact from the circumstances out. follow from the fact that for other people, the assets are held, there are the specific obligations of the trustee ).
• Discretionary trusts ( The group of beneficiaries is only circumscribed in the Trust Deed and not well defined. Comes to the trustee may have important influence to narrow the circle of beneficiaries in more detail or to expand ).
• Dynasty trust or generation - skipping trust ( family trust, arises as a normal Express Trust, however, the beneficiaries are not the children of the settlor, but the grandchildren ).
• Express trust ( The express trust created by the asset transfer by the settlor and the acquisition of the assets by the trustee, the major subtypes of Express Trust:. . Testamentary trust Inter Vivos Trust, Unit Trust and Purpose Trust opposed to Express Trust are the Resulting Trust or Constructive Trust).
• Fixed trust (the group of beneficiaries is strictly limited, the trustee can only expand these fixed circle of beneficiaries not or slightly or narrow ).
• Freezer trust (From the Trust will only surpluses distributed to the beneficiaries ).
• Grantor trust, the grantor trust is primarily for the interest of one or more beneficiaries, some of the Grantors / settlor itself often has the settlor / grantor each timely partially or not at cancellation and / or amendment of law for the legal basis of the Trust, in particular with regard to the favoring of the Trust. The grantor trust for tax purposes generally no legal entity (non- taxable). The term grantor trust is ambiguous (see also below revocable trust).
• Hybrid trust (the Trust hybrid trust combines elements of fixed and discretionary trust ).
• Inventive trust
• Inter vivos trust or living trust (trust is built during the lifetime of the settlor ).
• Irrevocable trust (the Trust is irrevocable built with few exceptions, the revocation ).
• Investments trust (investors buy shares in a property and obtain transferable share certificates and thus entitled to the benefits of the trust assets. Unlike the normal Trust here the trust assets is provided by a variety of investors. ).
• Offshore trust ( The Offshore Trust in the strict sense is any trust, is what built upon a jurisdiction other than the one which is subject to the settlor. In another sense of the word is referred to as an offshore trust one that is placed in an offshore financial center ).
• Private trust (beneficiaries of the Trust are exactly individualized persons or group of persons opposed. Public Trust ).
• Protective trust ( with the Protective Trust is to prevent creditors of the beneficiary or of the self which can be accessed rightful benefits or claims the trust).
• Public trust or charitable trust (beneficiaries of the Trust are an indeterminate group of people The Trust has a public / charity only through selection by the Trustee an actionable claim of the beneficiary is established against the Trust contrast: .. . Private Trust).
• Resulting trust ( The Resulting Trust arises when, although the transfer of assets has come to the trustee legal effect, but the Trust itself can not be built or the trust purpose can not be achieved ).
• Revocable trust ( By the settlor / grantor at any time revocable trust - hence simply as " Grantor Trust " hereinafter).
• Simple trust or bare trust (U.S. Only: The only job of the trustee is to convey the claims of the beneficiaries of the trust in a tax year, the trustee thus administers the trust only passively contrast: .. . Special trusts The Simple trust can not solely for fulfilling charitable purposes exist (see " Complex trust ") and may in this respect also usually no withholding active ).
• Special trust (U.S. only: The object of the trustee is to actively manage the Trust contrast. Simple trust).
• Spendthrift trust ( in place of the power from the trust to the beneficiary enters the Spendthrift Trust, if a beneficiary is unable to manage his assets (eg a spendthrift ) ).
• Standby trust or pourover trust (the Trust has during the lifetime of the settlor does not function or the assets will be transferred only with the death of the settlor in the trust ).
• Statutory trust (the statutory trust is determined by law. Example: standby trust or pourover trust).
• Testamentary trust or Will trust (trust that results in the death of the settlor because of the arrangement in his will or by his last will ).
• Unit trust ( Collective investment, the settlor are simultaneously beneficiaries).
• Voting trusts ( Joint exercise of shareholders' rights by a trustee for their benefit. Here, the voting will be transferred to the Trustee ).

Differentiation from similar legal relationships

The Trust is not a pretty business relationship between the settlor and the trustee or the beneficiary ( Benficiaries ). demarcation:

• The contract there is no contractual relationship for the transfer of assets between settlor and trustee,
• The Trust can be justified by the assets secretion by the Trust Deed and by the settlor alone, there is no contractual relationship with the trustee to the creation of the trust is necessary. Therefore, the asset disclosure is also not a gift.

• The beneficiaries derive their right and claim directly from the trust assets in accordance with the instructions in the trust instrument from.
• The trustee is formally owner but not enriched by the added applied trust assets. The grant is an investment fund whose dividends material allocated to beneficiaries.
• In support of trusts no trustee must assume the assets.

• A contractor is not the owner of the property as is the trustee.

• The lien is not agreed for the benefit of third parties,
• The Pledgor shall remain the owner of the deposit, the depositary or pledgee has only possession.

• The owner has no right to manage the thing.

• The Trust has no legal personality (legal entity )
• The shareholders have rights against each other. The beneficiaries of the Trust have each other, from the claim to the trust itself, no legal relationship.

• The Trust has no legal personality,
• The Foundation is directed to a purpose toward ( fulfillment of Stiftungszecks ), the Trust on favoring certain persons,
• Beneficiaries have partly no actionable claim,
• The Foundation does not necessarily have customizable beneficiaries.

• Private law institution has legal personality may members, partners or shareholders and may invest in shares have decomposed capital.
• The founder of the institution has in private law is a much weaker function as the Trustee in the Trust ( at the Institute include ongoing instruction by the founder to the management possible and also an arbitrary resolution).

Criticism of trusts

The legal institution of the trust is partially assumed

• To be a means of obscuring the actual ownership,
• To be used as a tool for tax evasion,
• That this money laundering is favored, and also
• Breach of duty fractional rights will be facilitated
• Etc.