Trusts: Comparisons and distinctions

• What are the main relationships and concepts compared with trusts?

  Contracts, debtor-creditor relationships, proprietary security interests, agency, bailment, companies, administration of estates, and gifts
• What are the key distinctions between trusts and contracts?

  • Trusts are created by equity, while contracts are created by common law.
  • Trusts do not require an agreement between parties; contracts do.
  • Obligations in trusts arise from the trustee to the beneficiary, while in contracts, obligations are mutual.
• How does a trust differ from a debt?

  A trust relates to specific property, while a debt is merely an obligation to pay a sum of money.
• What is the definition of a debt?

  A debt is an obligation to pay a sum of money.
• What are the key differences between trusts and charges?

  • A charge allows the chargor to use charged property for their benefit, while a trustee cannot benefit from trust property.
  • Trust beneficiaries enjoy the entire trust property, while a chargee's interest is limited to the debt amount.
  • A charge includes a right of redemption, which is not present in trusts.
• What is the role of an agent in a legal relationship?

  An agent has the authority to create legal relations between the principal and third parties.
• How do trusts and agency differ in terms of fiduciary duties?

  • Both agents and trustees are subject to fiduciary duties.
  • A trustee cannot commit a beneficiary to a contract with a third party, while an agent can.
  • The relationship between agent and principal is typically a debtor-creditor relationship.
• What are the main distinctions between trusts and bailment?

  • Bailment involves only tangible personal property, while trusts can hold any asset or right.
  • Bailment transfers possession without affecting legal title; trusts divest the settlor of their interest.
  • A bailor's interest survives misapplication of property, while a trustee can transfer legal ownership.
• What are the similarities and differences between trusts and companies?

  Similarities:

  • Both can hold property and involve fiduciary roles.

  
  

  Differences:

  • A trust does not have legal personality, while a company does.
  • Trustees act in the best interests of beneficiaries, while directors owe obligations to the company.
• What is the role of a personal representative in estate administration?

  • Responsible for administering a deceased person’s estate.
  • Types include executors (appointed by the deceased) and administrators (appointed by the court).
  • Must distribute the estate according to the will or intestacy rules.
• How do trusts and gifts differ in terms of ownership transfer?

  • A gift involves absolute transfer of full legal ownership.
  • In a trust, the settlor creates a new equitable interest for the beneficiary.
  • A gift does not create a separate equitable interest, while a trust does.
• What rights do beneficiaries have compared to contracting parties and creditors?

  • Beneficiaries have personal and proprietary rights.
  • Contracting parties and creditors have personal rights only.
• What is a defining characteristic of a charge?

  A right of redemption is the defining characteristic of a charge.
• How are trusts regulated compared to bailment?

  Trusts are regulated by equity, while bailment is regulated by common law.
• How do trustees act in relation to beneficiaries?

  Trustees transact as principals and not as agents for their beneficiaries.
• How can trusts be combined with other legal relationships?

  Trusts can be combined with loans, agency relationships, and other contracts.
• What is the difference between legal and equitable interests in assets?

  • The full legal owner has only a legal interest in the asset.
  • There is no separate equitable interest in a gift; it involves the transfer of legal interest.