A trust is a three-party fiduciary relationship in which the first party, trustor or settlor, transfers ("settles") the property (often but not necessarily a sum of money) on the second party (trustee) for the benefit of a third party, benefit recipients.
A testament is made by a will and appears after the death of the settlor. Trust inter vivos is made during the lifetime of settlor by a trust instrument. Trust can be irrevocable or irrevocable ; in the United States, trust is considered irrevocable unless the instrument or will make it declare it can be canceled, except in California, Oklahoma and Texas, where trust is deemed to be canceled up to the instrument or will make them claim that they can not be canceled. Unrevocable beliefs can be "broken" (revoked) only by legal process.
Similar beliefs and relationships have existed since Roman times.
The trustee is the legitimate owner of the property in trust, as a fiduciary to the beneficiary or beneficiary who is the equal owner of the trust property. Therefore, the trustee has a fiduciary duty to manage trust for the benefit of the just owner. They should provide regular income accounting and spending on trust. Supervisors can be compensated and reimbursed their fees. A court with competent jurisdiction may remove a guardian who violates his fiduciary duty. Some violations of fiduciary duty can be imposed and tried as criminal offenses in court.
The trustee may be a natural person, business entity or public body. Trust in the United States may be subject to federal and state taxes.
Video Trust law
Overview
Trust is made by a settlor, who transfers property to some or all of its properties to the trustee, who then holds property rights to the property in trust for the benefit of the beneficiaries. Trust is governed by the provision made. In most jurisdictions, this requires a contractual agreement or act of trust. It is possible for an individual to take on more than one role from these parties, and for many individuals to share a single role. For example, in the beliefs of life, it is common for the giver to be a guardian and lifelong beneficiary while naming other beneficiaries.
Trust has existed since Roman times and has become one of the most important innovations in property law. The law on guardianship has evolved through different court rulings in different states, so the statements in this article are generalizations; understand the complex jurisdiction-specific law cases involved complicated. Some US states adapt the Uniform Trust Code to codify and align their laws of trust, but country-specific variations still exist.
An owner who places the property into trust will transfer some of his property to the trustee, separating ownership and control of property law from its equitable ownership and benefits. This can be done for tax reasons or to control the property and its benefits if the settlor is absent, unable, or dead. Trust agreements can be made by will, defining how money and property will be handled for children or other beneficiaries.
Although the trustee is granted a legal right to the trust property, in accepting property rights, the trustee has a number of fiduciary obligations to the beneficiary. The main tasks owe include loyalty obligations, prudential obligations, impartiality liabilities. Trustees can hold very high standard of care in their transactions, to enforce their behavior. To ensure the beneficiaries receive their rights, the trustee is subject to a number of additional tasks to support key tasks, including the task of openness and transparency; the task of recording, accounting, and disclosure. In addition, the trustee has an obligation to know, understand, and comply with the relevant provisions of belief and law. The trustee can be compensated and fees have been reimbursed, but otherwise must surrender all the profits of the trust property.
There are strong restrictions on trustees with conflicts of interest. The court may reverse the trustee's actions, order the returns to be returned, and impose other sanctions if they find the trustee has failed in any of his duties. Such failure is referred to as a breach of trust and may leave a negligent or dishonest guardian with a heavy obligation to their failure. It is advisable for owners and guardians to seek qualified legal counsel before entering into a trust agreement.
Maps Trust law
History
Ancient example
Possible early concepts that later evolved into what is now understood as land-related beliefs. An ancient king (settlor) gave property back to the previous owner (beneficiary) during his absence, supported by the witness's testimony (wali). In essence and in this case, the king, replacing the next state (trustor and asset holder at the highest position) issues joint ownership with past results to the original recipient:
On the testimony of Gehazi's servant Elisha that the woman is the owner of this land, the king returns all her property to her. From the fact that the king commanded his eunuch to return to the woman all his property and the produce of his land since he left...
English common law
Roman law has a well-developed concept of belief ( fideicommissum ) in terms of the "will" trust made by the testament but never developed the concept of inter vivos (life) of prevailing beliefs live creators. This is made by the jurisdiction of general law in the future. The law of personal belief was developed in England at the time of the Crusades, during the 12th and 13th centuries. In medieval English religious law, the settlor is known as the feoffor for use while the trustee is known as feoffee for use and the beneficiary is known as cestui que use, or confidence cestui que .
At that time, land ownership in England was based on a feudal system. When a landowner left England to fight on the Crusade, he conveyed ownership of his land in his absence to manage the land and pay and receive the feudal dues, with the understanding that ownership would be reappeared when he returned. However, Crusaders often experience refusal to submit property after their return. Unfortunately for the Crusaders, English common law does not recognize its claims. As far as the King's court is concerned, the land belongs to the trustee, who is not obliged to return it. The Crusaders have no legal claims. The dissatisfied Crusaders will then petition the king, who will refer the matter to his Chancellor. The Lord Chancellor can decide a case according to his conscience. At this time, the principle of equality was born.
The Lord Chancellor would consider it a "mind" that the rightful owner could return to his words and reject the claims of the Crusaders ("right" owners). Therefore, he will find the support of the Crusaders who return. Over time, it became known that Lord Chancellor court (the Court of Chancery) will continue to recognize the claims of a returning Crusader. The rightful owner will hold the land for the benefit of the original owner and will be forced to bring it back to him when requested. The Crusaders are the "recipients" and acquaintances of "trustees". The term "land use" was created, and over time it developed into what we now know as trust .
Significance
Trust is widely regarded as the most innovative contribution of the British legal system. Today, trust plays an important role in the most common legal system, and their success has led to several jurisdictions of civil law to incorporate confidence into their civil regulations. In CuraÃÆ'§ao, for example, the trust was passed into law on January 1, 2012; however, CuraÃÆ'§ao Civil Code only allows trusts made by notaries. France recently added a Roman law-based device similar to its own law with fiducie , which was amended in 2009; fiducie , unlike trust, is a contractual relationship. Trust is widely used internationally, especially in countries within the sphere of influence of British law, and while most civil law jurisdictions generally do not contain the concept of belief in their legal system, they acknowledge the concept under the Hague Convention on the Law of Applicability and Their Recognition (partly just because they are the parties in it). The Hague Convention also regulates conflicts of confidence.
Although trust is often associated with the transfer of wealth between families, they have become very important in American capital markets, especially through pensions (in certain countries always trusting) and mutual funds (often trusting).
Basic principles
Property in any form can be stored in trust. The use of multiple and diverse trusts, both for personal and commercial reasons, and trust can provide benefits in property planning, asset protection, and taxes. A life belief can be created during one's life (through the making of a trust instrument) or after death in a will.
In a relevant sense, a trust can be seen as a generic form of a company in which the settlers (investors) are also beneficiaries. This is particularly evident in the Delaware business beliefs, which theoretically can be, with the language in "governing instruments", governed as cooperative enterprises or limited liability companies, although traditionally Massachusetts business beliefs have been commonly used in the US. One of the most significant aspects of trust is the ability to share and safeguard the assets of the trustee, the many beneficiaries, and their respective creditors (especially the creditor creditors), make it "far bankruptcy", and lead to its use in pensions, mutual funds, and asset securitization as well as protection of individual personal expenses through extravagant trust.
Terminology
- Referrer: This is the person who can assign a new trustee or delete an existing one. This person is usually mentioned in a trust deed.
- Promise: In the law of belief, "promise" often has everyday meaning. It is common to talk about "appointment of trustee", for example. However, the "promise" also has a legal meaning of technical belief, either:
- the act of 'appointment' (ie granting) assets of trust to the beneficiary (usually where there are multiple options in the matter - such as discretionary trust); or
- the name of the document that gives effect to the appointment.
- The right of the guardian to do this, if any, is called the rapture power. Sometimes, the power of appointment is given to someone other than a trustee, such as a settlement, patron, or heir.
- 'As Trustee For' (ATF): This is a legal term used to state that an entity is acting as trustee.
- Beneficiaries: Beneficiaries are those who receive the benefits of any assets held by the trust.
- 'In Own Own Capacity' (IIOC): This term refers to the fact that the trustee acts on his own behalf.
- Protector: A patron can be secretly designated, inter vivos trust, as a person who has control over a trustee - usually includes the power to fire the trustee and appoint another. The legal status of the protector is the subject of some debate. No one doubts that a trustee has a fiduciary responsibility. If a protector also has fiduciary responsibility, then the court - if requested by the beneficiary - may order it to act in accordance with a court decision. However, a protector is not necessary for the nature of trust - many beliefs can and operate without one. In addition, the protector is relatively new, while the nature of trust has been established for hundreds of years. It is therefore thought by some that the patron has a fiduciary duty, and by others that they do not. Case law has not set this point.
- Settlor (s): This is the person (or person) who creates trust. Grantor (s) is a common synonym.
- Conditions of Trust means the wishes of the homeowner expressed in the Belief Instrument.
- Trust trust: Trust trust is a legal document that defines trust such as the trustee, the beneficiary, the settler and the appointment, and the terms and conditions of the agreement.
- Distribution of trust: Distribution of trust is any income or asset given to the beneficiaries of trust.
- Trustee: A person (either an individual, a company or more of either) that manages a trust. The trustee is considered a fiduciary and owes the highest obligations under the law to protect the trust assets from unwarranted loss to the trustees.
Creation
Trust can be created by the explicit intent of the settlor or they can be made by legal operations known as implicit beliefs. The implied belief is created by the equity court because of the actions or situations of the parties. Implied belief is divided into two categories: generated and constructive. The confidence generated is implied by law to establish the alleged intentions of the parties, but it does not take into consideration their stated intentions. Constructive beliefs are beliefs implied by law to create justice between the parties, regardless of their intentions.
Usually trust can be made in the following four ways:
- a written trust instrument created by a settlor and signed by either settlor and trustee (often referred to as inter vivos or life belief);
- oral declaration;
- the will of the dead, usually called the will of the testament; or
- a court order (eg in a family process).
In some jurisdictions, certain types of assets may not be the subject of trust without a written document.
Formality
Generally, trust requires three certainties, as defined in Knight v Knight :
- Intent. There should be a clear intention to create trust ( Re Adams and Kensington Vestry )
- Subject Material. Properties subject to trust should be clearly identified ( Palmer v Simmonds ). One may not, for example the state, complete the "majority of my estate", because to what extent can not be ascertained. The trust property can be a particular form of property, whether real or personal, tangible or intangible. Often, for example, real estate, stock or cash.
- Objects. The beneficiaries of the trust must be clearly identified, or at least assured (Re Hain's Settlement). In the case of discretionary trust, where the trustee has the authority to decide who will be the beneficiary, then the settlor must represent a clear class of beneficiaries ( McPhail v Doulton ). Beneficiaries can include people who are not born on a trust date (eg, "my future grandchild"). Or, the object of trust can be a charitable goal rather than a special beneficiary.
Supervisor
The trust may have many guardians, and these guardians are the rightful owners of the trust property, but have fiduciary duties for the beneficiaries and various tasks, such as the duty of care and the obligation to notify. If the guardian does not comply with this obligation, they may be removed through legal action. The trustee may be a person or legal entity such as a company, but usually the trust itself is not an entity and any lawsuit must be against the trustee. The trustee has many rights and responsibilities that vary based on jurisdiction and trust instruments. If the trust does not have a trustee, the court may appoint a trustee.
The trustee manages the officer's affairs for trust. Trust trusts may include carefully investing assets of trust, accounting and reporting periodically to beneficiaries, filing required tax returns and other duties. In some cases depending on the trust instrument, the trustee must make a discretionary decision, whether the beneficiary should receive a trust asset for their benefit. The trustee may be held personally responsible for matters, although fiduciary liability insurance that is similar to that of directors and officers of liability insurance may be purchased. For example, a trustee may be responsible if the asset is not invested properly. In addition, the guardian may be responsible to its beneficiaries even when the trust has made a profit but no consent has been granted. However, in the United States, similar to directors and officials, an exception clause can minimize responsibility; although previously it was considered contrary to public policy, this position has changed.
In the United States, the Uniform Trust Code provides reasonable compensation and reimbursement for trustees to be examined by the court, even though the trustee may not have been paid. Commercial banks acting as trustees typically charge about 1% of the managed assets.
Beneficiaries
The beneficiary is the owner of a trust property that is profitable (or 'equivalent'). Either immediately or eventually, the beneficiary will receive income from the trust property, or they will receive the property itself. The importance of a recipient depends on the words of the trust document. One recipient may be entitled to income (for example, interest from a bank account), while another may be entitled to the entire trust property when he reaches the age of twenty-five. Settlor has a lot of wisdom when it creates trust, subject to some limitations imposed by law.
Beneficiaries are jocosely known as "trust fund babies" or "trustafarians".
Destination
Common goals for trust include:
- Privacy: Trust can be made purely for privacy. The term of a will is public in certain jurisdictions, whereas the requirements of a belief are not.
- The spendthrift clause: Trust can be used to protect beneficiaries (eg, one's children) against their own inability to handle money. It's very interesting to be wasted. Courts can generally recognize the imposition clauses that adversely affect the beneficiaries and their creditors, but not the creditor owners of the settlement.
- Planning of probates and possessions: Beliefs often appear in wills (indeed, technically, the administration of every inheritance of the deceased is a form of trust). Conventional wisdom usually leaves an asset to a deceased partner (if any), and then to the same children. If children under the age of 18, or under any other age mentioned in the will (21 and 25 are common), trust should arise until the 'age of probability' is reached. The executor of the testament is (usually) the trustee, and the children are the beneficiaries. The trustee will have the power to help the beneficiaries during their minority.
- Charities: In some general legal jurisdictions all charities should take the form of trust. In other countries, the company may also be a charity. In most jurisdictions, charities are strictly regulated for public purposes (in the UK, for example, by the Charity Commission).
- Unit trust: Trust has proven to be a flexible concept that is proven to work as an investment vehicle: unit trust.
- Retirement plans: usually established as trustworthiness, with employers as settlements, and employees and their dependents as beneficiaries.
- Trust remuneration: for the benefit of directors and employees or their company or family or dependents. This form of trust was developed by Paul Baxendale-Walker and has since been widely used.
- Corporate structure: Complex business arrangements, most often in the financial and insurance sectors, sometimes use trust among various other entities (eg, corporations) in their structure.
- Asset protection: Trust can enable the beneficiary to protect the assets of the creditor because the trust may be a remote bankruptcy. For example, discretionary trust, in which a settlor can be a protector and a receiver, but not a trustee and not the sole recipient. In such an arrangement, the settlor may be in a position to take advantage of the trust's assets, without possessing them, and therefore in theory protected from creditors. In addition, trust can try to maintain anonymity with names that are not linked at all (eg, "Teddy Bear Trust"). This strategy is ethically and legally controversial.
- Tax planning: The tax consequences of doing things using trust are usually different from the tax consequences of achieving the same effect as other routes (if it is possible to do so). In many cases, tax consequences use trust better than alternatives, and trust is therefore often used for legal tax avoidance. For an example, see "nil-band discretionary trust", described in the Inheritance Tax (UK).
- Shared ownership: Property ownership by more than one person is facilitated by trust. In particular, marriage house ownerships are usually influenced by trust with both partners as recipients and one or both have legal rights as trustees.
- Legal construction: In Canada and Minnesota the money paid by employers for contractors or by contractors for subcontractors on construction projects must by law be held in trust. In the event of a contractor's insolvency, it allows the subcontractor to be paid for the completed work.
- Legal detention- Lawyers in certain countries often require that legal retainers be paid up front and kept in confidence until the legal work time is made and billed to clients, this serves as a minimum wage guarantee in case the client becomes bankrupt. However, strict codes of conduct apply to the use of legal retainer trust.
Type
List of alphabetical trust types
Trust comes from England, and therefore English believes in the law has had a significant influence, especially among the legal systems of common law such as the United States and Commonwealth countries.
The laws of confidence in the jurisdiction of civil law, generally including Continental Europe, exist only in a number of jurisdictions (eg, CuraÃÆ'§ao, Liechtenstein and Sint Maarten). But that trust can be recognized as a foreign legal instrument in conflict of legal cases, for example in the Brussels (European) regime and parties to the Hague Confession Convention. The issue of tax evasion has historically been one of the reasons why European countries with civil legal systems are reluctant to adopt trust.
United States
State law applies to trusts, and the Uniform Trust Code has been enacted by legislatures in many states. In addition, federal law considerations such as federal taxes administered by the Internal Revenue Service may affect the structure and creation of trust. Common belief laws are summarized in the Legal Reiteration, such as Statement of Belief, Third (2003-08).
In the United States, tax laws allow a trust to be taxed as a corporation, partnership, or not at all depending on circumstances, although trust can be used to evade taxes in certain situations. For example, the security favored by trusts is hybrid security (debt and equity) with favorable tax treatment that is treated as regulatory capital on bank balance sheets. The Dodd-Frank Wall Street Reform and Consumer Protection Act change this by not allowing these assets to become part of the (large) bank regulatory capital.
Land planning
A belief in life, as opposed to belief (will) a testament, can help a guardian avoid a will. Avoiding judges can save money and keep the privacy and confidence that life becomes very popular. Probate is potentially expensive, and wills are available to the public while distribution through trust is private. Both the belief and the will of life can also be used to plan unforeseen circumstances such as disability or incompetence, by granting discretionary authority to the trustee or executor.
Negative aspects of using life beliefs as opposed to wishes and wills include upfront legal costs, trust administration costs, and lack of certain protections. The cost of trust may be 1% of property per year versus a one-time legalization fee of 1 to 4%, which applies whether or not a will is conceptualized. Unlike trusts, the wills must be signed by two to three witnesses, depending on the law of the jurisdiction in which the will is executed. Legal protection applicable to wills but not automatically applicable to guardianship, including provisions that protect the assets of the deceased from mismanagement or embezzlement, such as bonding, insurance, and account terms specified from the probate asset.
Property tax effects
The life trust generally does not protect the assets of US federal property taxes. Married couples may, however, effectively double the amount of real estate tax exemptions by regulating trust with the clause formula.
For a living believer, the giver can maintain some level of control over trust, such as with rapture as a protector under the instrument of trust. Living beliefs, too, in practical terms, tend to be pushed into many things by tax considerations. If a living belief fails, the property will usually be held for the giver/settler on the resulting trust, which in some important cases, has catastrophic tax consequences.
South Africa
In many ways, trusts in South Africa operate similarly to other common law countries, although South African law is actually a composite of the general legal system of British and Roman-Dutch law.
In South Africa, in addition to traditional life beliefs and will believe there is a 'bad belief' (inherited from Roman-Dutch bewind managed by a bewindhebber ) where beneficiaries have assets trust while trustees manage trust, although this is considered by modern Dutch law which is not really a belief. Bewind trusts are made as trading vehicles that provide guardians with limited liability and certain tax advantages.
In South Africa, small children can not inherit assets and in the absence of trust and assets held in state institutions, Dana Guardians, and released to children in adulthood. Therefore, trust will will often leave assets in trust for the benefit of these little children.
There are two types of beliefs that live in South Africa, namely upheld trust and discretionary beliefs. In the personal belief, the benefits of the beneficiaries are set out in the trust deed, whereas in discretionary trustees trust has full discretion at all times about how much and when each beneficiary will benefit.
Asset protection
To date, there are tax advantages to the beliefs of life in South Africa, although most of these advantages have been removed. Asset protection from creditors is a modern advantage. With clear exceptions, assets held by trust are not owned by the trustee or the beneficiary, the trustee's creditor or the beneficiary can not claim against the trust. Under the Bankruptcy Act (Act 24 of 1936), assets transferred into the confidence of life remain at risk from external creditors for 6 months if the previous owner of the asset is a solvent upon transfer, or 24 months if he is bankrupt at the time of transfer. After 24 months, creditors have no claims against assets in trust, although they may try to attach a borrowing account, thereby forcing confidence to sell its assets. Assets can be transferred to the confidence of life by selling them to trust (through loans given to trust) or donating cash for it (each natural person can donate R100 000 per year without withdrawing taxes donations; 20% tax donations apply for further donations in the year the same tax).
Tax considerations
Under the belief of living South African law is considered a taxpayer. Two types of taxes apply to life confidence, namely income tax and capital gains tax (capital gain tax - CGT). Trust pays income tax at a fixed rate of 40% (people pay by income scale, usually less than 20%). Income trusts may, however, be taxed in the hands of either a trust or an heir. A belief to pay CGT at a rate of 20% (people pay 10%). Trust does not pay property taxes that have died (although trust may be required to repay an unpaid loan to a deceased property, where the loan amount may be taxed with a deceased inheritance tax).
A taxpayer whose residence has been 'locked' into a trust has now been given another opportunity to take advantage of this CGT exclusion. The Amendment Law of the Taxation Law of September 30, 2009 begins on January 1, 2010 and is granted a period of 2 years from 1 January 2010 to 31 December 2011, giving individuals the opportunity to take over residence with the advantage of no debt transfer duties or consequences CGT. While taxpayers can take advantage of the opening of this window of opportunity, it is unlikely that it will be available thereafter.
See also
- Believe blind
- Foundation (charity)
- Rabbi's belief
- STEP (Society of Trusts and Estate Practitioners), international professional associations for trust industry
- Totten belief
- Trust & amp; Plantations (journals)
- Use (legal)
Specific jurisdiction:
- The Argentine Legal System, law number 24441 of 1994.
- Australian trust law
- Henson Trust
- Italian law of trust
- The law of confidence in the jurisdiction of civil law
- Credentials in England and Wales
Note
References
- Hudson, A (2003). Equity and Trust (3rd ed.). Cavendish Publications. ISBN: 1-85941-729-9.
- Mitchell, Charles; Hayton, DJ (2005). Hayton and Marshall's Comment and Case of the Law of Faith and Fair Action (12th ed.). Sweet & amp; Maxwell.
- Mitchell, Charles; Hayton, DJ; Matthews, P (2006). Underhill and Hayton's Law Relates to Trust and Trustees (17th ed.). Butterworths.
Further reading
(PDF) , Studio legale Tedioli, April 28 (c) The Legal Trust of the People's Republic of China (Presidential Order No. 50) 2001Source of the article : Wikipedia
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