Common Law Trust Research Articles

The Trust Facing Chilean Law: An Approach from the Perspective if the "Rights Against Rights´ Theory

Understanding the common law trust has traditionally posed mayor difficulties for civilian lawyers. This article submits that, to a relevant extent, these difficulties stem from attributing excessive importance to metaphors that describe the trust as a form of "double" or "divided” ownership. As an alternative, it proposes using theories that explain the trust as a case of "rights against rights", arguing that this is as conceptually more precise and adequate to explain this institution to a Latin American audience. Based on this, the article analyzes some classic functional equivalents of the trust in the civilian tradition, such as companies and agency, and two specific institutions of Chilean law: pension funds and investment funds.

Confusion, Illusion, or Delusion: The Irreducible Core of the Common Law Trust

Confusion, Illusion, or Delusion: The Irreducible Core of the Common Law Trust

Re-exploring the nature of dual ownership in English trusts: a Scottish law perspective

Abstract Owing to the unique social and historical background, the ownership of trust assets of English trusts is divided into two parts, namely the ownership in common law, which is held by the trustee, and the ownership in equity which is held by the beneficiary. In consideration of the unified ownership principle in civil law jurisdiction, most scholars argued that there is no theoretical compatibility between the common law trust and civil law tradition. This article aims to re-explain the legal nature and economic functions of the dual ownership structure of English trusts by re-considering the origins of the trust in medieval England and comparing the practices of quasi-trust regimes in continental and mixed jurisdictions, and finally this article argues that the success of the Scottish trust in functioning as an equivalent asset management mechanism to the English trust may have provided an answer to the above paradox.

Lingering Partnership Classification Issues (Just When You Thought It Was Safe To Go Back Into the Water)

This article discusses the federal income tax law relating to the classification of entities as partnerships for federal income tax purposes, with a focus on the practical problems that lawyers often encounter in distinguishing partnerships from associations under the four factor test set forth in Regulations section 301.7701-2. Partnership classification issues arise with respect to both general and limited partnerships formed under state partnership statutes and certain partnership-like foreign entities. Moreover, the recent proliferation of other types of entities seeking partnership classification, such as "master limited partnerships," limited liability companies, business trusts, common law trusts and grantor trusts with partnership "fallback" positions, has focused renewed attention on those issues and raised still more classification issues. The Internal Revenue Service's recent published rulings have addressed some of these issues, but a number of issues remain.

Salt, Smurthwaite, and Smith: The Origins of the Modern Legal Identity of the Church of Jesus Christ of Latter-day Saints

Salt, Smurthwaite, and Smith: The Origins of the Modern Legal Identity of the Church of Jesus Christ of Latter-day Saints

Legal landscape of trust law in Thailand: the fading twilight of common law trusts and the sunrise of statutory trusts

Abstract The creation of trusts in Thailand was strictly prohibited by the adoption of the Civil and Commercial Code in 1935. However, this civil law jurisdiction is currently home to a number of trusts: those created prior to 1935 in accordance with English law and trusts for use in capital markets, a statutory exception introduced in 2008. With a bill introducing trusts for personal asset management in the legislative pipeline, this article presents a timely overview of this little-known but evolving trust law landscape.

Uncovering Russian trust management agreements: not an alternative to Russian private foundations

Abstract A Russian trust management arrangement is a contract for managing third party assets and cannot be mirrored with common law trusts since Russian law is not familiar with the concept of beneficial ownership. Russian trust management agreements are mainly used for managing portfolios of securities by regulated Russian asset managers, for managing Russian real estate and for the short-term management of assets falling into the estate of a deceased person during the probation period. Not suitable for exclusive succession planning purposes, trust management thus cannot be an alternative to Russian hereditary foundations which were specifically launched in Russian law in 2018 as post-mortem local foundations, and whose use remains to be seen in practice.

The Common Law Trust as a Liable Party: The Panama Case

The Common Law Trust as a Liable Party: The Panama Case

Family Foundations in Switzerland

Abstract At a governmental level, the introduction of a Swiss law on trusts is currently being reviewed. One of the arguments is that Switzerland does not provide for a suitable instrument to be used for estate planning or asset protection purposes. Many scholars and practitioners take the view, though, that a common law trust is not a suitable instrument and that therefore it would be more advisable to review the existing instruments, such as the Swiss family foundation or the fiducie (Treuhand), and to amend them accordingly. This article shall shed some light on the Swiss family foundation, on its use and limits and how it could be used de lege ferenda in the future if its legal limits were finally to be released.

Russian Family Foundations: benefits and pitfalls for international clients with Russian connections

Abstract Since 2018, Russian law has provided for the concept of a “Hereditary Foundation”, a private foundation which can be established after the demise of the testator and which can act in a way similar to a common-law trust. It is an option for complex estate planning under Russian law. It has attracted both interest and controversy, with many concerned that the gray area, lacunae, and inconsistencies in the legislation may prevent its effective implementation. The authors analyze the practical challenges in this area and consider whether and how this vehicle fares in competition with the non-Russian structures traditionally used by Russian private clients for estate and succession planning.

Trusts Reimagined: The Transplantation and Evolution of Trust Law in Northeast Asia

Abstract This Article suggests that the trust envisaged by a Northeast Asian lawyer is not like the trust a common lawyer would generally conceptualize, and that a structurally different species of trust has been reconstructed and reimagined in Northeast Asia. Trust law can be transplanted, yet some of its rules are too cumbersome to be accepted directly. This ultimately calls for modifications of some of the features of the common law trust, which happened in Northeast Asia when trust law was transplanted into Romano-Germanic civil law culture, culminating in a type of civil law trust. This Article explains how the doctrinal conflicts between the civil law tradition and the common law trust have been resolved by examining the transformations that took place in the course of the transplantation process and how these conflicts created a distinctive underlying structure of the trust in Northeast Asia. Many compromises and modifications were made to pare down conflicts arising from grafting the common law-based trust onto Romano-Germanic soil. However, adopting modified trusts unexpectedly led to the dilution of some of the traditional rules in the civil codes. These alterations and the ensuing discordance with some presently well-settled civil law theories are the core themes of this Article.

Thai Trust Law: A Legal Import Rooted in Pragmatism

The Thai Civil and Commercial Code expressly prohibits the creation of trusts except when provided for by specific legislation. To date, there is only one such piece of legislation: the Trust for Transactions in the Capital Market Act of 2007. However, the history of trusts in Thailand dates back to the late 19th century, and whilst the separation of legal and equitable titles does not sit well with the Code’s legal or intellectual framework, it is possible to provide a coherent explanation of its historical development through the lens of legal pragmatism. This chapter investigates the journey of trust law in Thailand, which runs in parallel with the country’s expansion of international trade and its industrial modernisation. It traces the historical judicial treatment of English common law trusts and the more modern regulatory attempt to integrate statutory trusts into the Thai legal system. Whilst both avenues demonstrate a highly adaptive and pragmatic approach to this imported equitable creature, they appeal to different legal and public policy considerations. With the Draft Bill on Trusts for the Purpose of Personal Asset Management having received cabinet approval in 2018, Thailand now stands at an important juncture for the development of its future trust law regime.

Trust Law in the Process of Reunifying East and West Germany<br>How a legal concept foreign to German law was the solution to merge a socialist and a capitalist economy between 1989 and the present

In the run-up to the Re-Unification of the East and West Germany in the 1990's the governments faced a problem, how do we integrate two political systems without causing a collapse of the economy and livelihoods. In order to counter the aforementioned the East-German government initiated the Treuhandanstalt, a piece of legislation that would govern over State Owned Enterprises in order to ready them for either investors to take over or for liquidation. In so doing the similarities between the Anglo-Saxon Trust and the Germanic Treuhand is of extreme interest, namely; in what manner did the German government design the Treuhandanstalt? Was it focussed on the Germanic tradition, of does it draw heavily from the common law trust? This paper focusses on the similarities and differences between the two concepts of ownership.

Dutch foundation as the civil law alternative to the common law trust

In a globally changing tax and legal environment, private clients are continuously on the lookout for alternative wealth planning instruments. The Dutch foundation might well be the alternative they have been looking for. In this article, the main tax and legal features of the Dutch foundation as ‘civil law trust’ are discussed.

Fiduciary Arrangements in Civil Law Countries: Framing the Trustee’s Role and Duties

This article explores how some civil law jurisdictions – Luxembourg, Italy, and France, which all derive their law from the Napoleonic Code – frame the role and the duties of trustees. Even though influenced by the common law, these countries developed original and independent solutions. Yet, the approaches of these civil law countries to fiduciary arrangements, and to the rights and duties of trustees, are not homogeneous and, in each of these jurisdictions, it may be difficult to clearly define the position of trustees. I suggest that some of these difficulties derive from the complexity of reconciling several key features of common law trusts with some principles existing in civil law jurisdictions. After an introduction, this article analyses the essential features of fiduciary arrangements in three civil law jurisdictions: Luxembourg, Italy, and France. Then, it examines how the role and duties of trustees have been developed in these countries and outlines the respective advantages and limits of the solutions adopted in these legal systems. I conclude by examining the evolution of the legislation on trusts and fiduciary arrangements in San Marino, and finally arguing in favour of the adoption, in civil law countries, of legislation on fiduciary arrangements that is more coherent with the legal framework in which they will operate.

Trusts and Ownership: A Common Law Perspective

In the trust institution introduced by the new Czech Civil Code, ‘ownership’ of trust ‘property’ is vested in no-one. What motivates this provision seems to be the view that the common law trust involves a division of ownership, but that such is prohibited in Czech law generally. The purpose of this article is to demonstrate that the idea of the common law trust involving a division of ownership is false. Indeed, English law does not even have a concept of ownership. It instead deals with rights, but even so, these rights are not split when held on trust. The question is how, if at all, these insights can help us understand the newly introduced Czech trust. The conclusion which is reached is that when the Czech Civil Code provides that the trust property is owned by no-one, it simply means that it is not held beneficially by anyone. The property is not, as might seem at first sight, res nullius.

(Un)enforceability of trust arbitration clauses in civil and common law

Arbitration clauses in civil and common law trusts are, in principle, unenforceable; the cause of this unenforceability is to be found in the lack of consent of the beneficiaries. To remedy this obstacle, theories have been created to try to explain the enforceability of trust arbitration clauses. Because these theories do not guarantee the enforceability of such clauses, legislative reform is needed and has occurred in both civil and common law jurisdictions.

Reflections on The Hague Trusts Convention after 30 years

The head of the UK Delegation for the XVth Session of The Hague Conference on Private International Law that agreed the Trusts Convention considers why more countries have not ratified or acceded to the Convention 30 years after its entry into force. The efficacy of the Convention's articles is examined with suggestions for clarifying their meaning or even for revising them if the opportunity arises. The conclusion is that the Convention largely reflects the position for validity of common law trusts, providing little incentive for a common law jurisdiction to ratify the Convention except as evidence of being a good respectable trust jurisdiction. However, the increasing use of, and familiarity with, the concept of ring-fenced funds in non-trust jurisdictions ought to lead more of them to implement the Convention. Such funds amount to “obligational trusts” of property requiring the beneficiaries' rights to have priority over the trustee's private creditors, heirs and spouse. The Convention requires trusts to have such preferential obligational effects as a minimum even though in a trust jurisdiction such trusts would have proprietary effects to bind third parties who were not bona fide purchasers for value.

Beware the Asset Protection Trust

AbstractCivil law regimes in Europe have been cautiously open to the common law trust for commercial purposes, and to some forms of the private trust as well. This openness indicates that the time may be right to issue a warning to civil lawyers about the recent proliferation of highly problematic forms of the trust in the U. S., and to offer an explanation of the dysfunction which allowed these trusts to win legislative approval. Civil law may be less amenable to these forms of trust for reasons of social policy and legal philosophy as expressed in foundational legal texts. Recent changes to EU trust law and to French and Dutch tax law indicate that this may be the case. This article discusses these new trust forms and discusses some elements of civil law which, at least from a common lawyer’s perspective, offer some resistance to them.

Application of discretion and certainties in waqf vis-a-vis trust

Waqf is widely regarded as the Islamic equivalent of a common law trust. There are noted commonalities between waqf and trust in their conceptual, structural, and functional frameworks. The technical division of waqf into waqf sarih (explicit) and waqf kinayah (implicit) has an identical parallel in trust, which is categorized into express and implied. Notwithstanding this, while the requirement of three certainties is central for a trust; a waqf does not necessarily require all the three certainties to assume validity. Additionally, with minute discrepancies aside, the mechanism of discretion as applied in waqf through ‘ten stipulations’ is almost analogous to the mechanism of discretionary trust.