The trust concept

• What is the definition of a trust?

  A trust is an equitable duty relating to property.
• Who is called the trustee in a trust?

  The person subject to the duty is called a trustee.
• Who is the beneficiary in a trust?

  The person to whom the duty is owed is called a beneficiary.
• What is trust property?

  The property to which the duty relates is called the trust property.
• What is the role of the trustee in relation to trust property?

  The trustee is usually the legal owner of the trust property.
• What type of interest does the beneficiary have in trust property?

  The beneficiary has an equitable proprietary interest in that property.
• Why is the duty of a trustee considered equitable?

  It was created and developed by the Court of Chancery.
• What is the basic content of the trustee's duty?

  The trustee must hold or apply the trust property for the benefit of the beneficiary.
• Is the description of a trust exhaustive?

  No, it is not intended to be exhaustive.
• Can a trust be created for a purpose rather than a person?

  Yes, it is possible in limited circumstances.
• What is a common judicial description of a trust?

  An equitable obligation to deal with property in a particular way.
• What does it mean when a person accepts property on the basis of holding it for another?

  It means they are acting as a trustee for the benefit of another person.
• What was the paradigmatic trust throughout the eighteenth and nineteenth centuries?

  The family trust, which enabled provision for successive generations.
• How did a typical family trust operate?

  Trustees were instructed to distribute income to the deceased’s spouse and then to children and grandchildren.
• What powers do trustees enjoy regarding trust property?

  Trustees enjoy all the powers of legal ownership.
• What happens to the trust after the grandchildren's deaths in a family trust?

  The trust would cease to exist.
• What are the two important attributes of a trust illustrated by the family trust?

  A trust separates the powers of legal ownership from the benefits and can confer different rights on different beneficiaries.
• How are trusts used in the context of listed securities?

  Legal ownership requires registration in an electronic register called CREST, where members hold securities on trust for clients.
• What is the role of a CREST member in the securities market?

  The CREST member is the legal owner of securities registered in their name.
• What is a sub-trust in the context of the broker and private investor?

  The broker holds its interest in shares on trust for the private investor.
• What are the legal rights of the CREST member regarding the shares?

  The CREST member is the legal owner of the shares but has no beneficial interest.
• What equitable interest does the broker have in the shares?

  The broker has an equitable interest in the shares held on trust for the private investor.
• What type of interest does the private investor have in the shares?

  The private investor has an equitable and beneficial interest in the shares.
• What does the term 'waterfall or chain of equitable relationships' refer to?

  It refers to the hierarchical structure of equitable interests among parties in a trust.
• What are the principal characteristics of a trust?

  Trust property, a trustee, a duty, objects (beneficiary or purpose), and an equitable proprietary interest.
• Why is identifiable trust property fundamental to trust law?

  Because a trust is an equitable duty relating to property.
• What was the outcome of the case Mac-Jordan Construction Ltd v Brookmount Erostin Ltd?

  The defendant was not a trustee for the plaintiff due to the lack of identifiable trust property.
• What is a chose in action?

  A chose in action is an intangible right, such as a debt owed to a person.
• What is a chattel?

  A chattel is a tangible item other than land, such as cars or jewelry.
• What happens to a trust if the trust property is destroyed without fault of the trustee?

  The trust ceases to exist.
• What is the trustee's liability if they are at fault for the loss of trust property?

  The trustee will be personally liable to restore the trust property or pay compensation.
• How does trust property typically fluctuate in a family trust?

  The trustee periodically reviews the trust property to maximize financial return.
• When does a trust cease to exist?

  A trust ceases to exist if the trust property is destroyed or consumed without fault of the trustee.
• What happens if the trustee is at fault for the loss of trust property?

  The trustee will be personally liable to restore the trust property using their own funds.
• What must a trustee do if they cannot replace the trust property?

  They will need to pay compensation, which will be subject to the trust.
• Can trust property change without a breach of trust occurring?

  Yes, it is common for trust property to change without any breach occurring.
• What is a principal function of a trustee in a family trust?

  To maximize the financial return from the trust property.
• Does selling trust property destroy the trust?

  No, selling the property simply changes the trust assets.
• What is required for a trust to exist?

  A trust must have a trustee.
• What rights does a trustee have over trust property?

  A trustee has all the rights and powers of legal ownership.