A. Historical Background
• Early medieval period practice
• Why Trusts? Possible uses…
• Apart from deliberately created trusts, there exist also resulting trusts i.e. where the court infers the existence of arelationship of trustee and beneficiary, and constructive trusts i.e. where the court imposes a relationship of trustee and beneficiary as a result of misconduct by the person held to be a trustee.
• The advantages of trusts:
i) flexibility of purpose
ii) rules governing trusts are mainly the same whatever the purpose.
B. Definition of Trusts
i) Doctrineii) Hague Convention on the Law Applicable to Trusts on their Recognition:
Article 2 defines the term ‘trust’:
For the purposes of this Convention, the term "trust" refers to the legal relationships created – inter vivos or on death – by a person, the settlor, when assets have been placed under the control of a trustee for the benefit of a beneficiary or for a specifiedpurpose.
A trust has the following characteristics –
a) the assets constitute a separate fund and are not a part of the trustee's own estate;
b) title to the trust assets stands in the name of the trustee or in the name of another person on behalf of the trustee;
c) the trustee has the power and the duty, in respect of which he is accountable, to manage, employ or dispose of
the assets inaccordance with the terms of the trust and the special duties imposed upon him by law.
The reservation by the settlor of certain rights and powers, and the fact that the trustee may himself have rights as a beneficiary, are not necessarily inconsistent with the existence of a trust.”
So here it refers to “the legal relationship created […] by a person, the settlor, when assets have been placed under thecontrol of a trustee for the benefit of a beneficiary or for a specified purpose…”.
iii) Trusts Act 2001:
(1) For the purposes of this Act, a trust exists where a person (known as a "trustee") holds or has vested in him, or is deemed to hold or have vested in him, property of which he is not the owner in his own right, with a fiduciary obligation to hold, use, deal ordispose of it -
(a) for the benefit of any person (a "beneficiary"), whether or not yet ascertained or in existence;
(b) for any purpose, including a charitable purpose, which is not for the benefit only of the trustee; or
(c) for such benefit as is mentioned in paragraph (a) and also for any such purpose as is mentioned in paragraph (b).(2) Notwithstanding articles 893, 896, 931 and 1130 of the Code, property and rights may be transferred to or vested upon trust in accordance with this Act.
Therefore the essential elements of a trust can be said to be the following:
i) Property subject to Trust
ii) One or more Trustees
iii) An Equitable Obligation
iv) One or more Beneficiaries
• Main characteristics:- ownership of property vested in Trust but trust property separate from property of trustee (Sections 3 and 32);
- a trust does not have legal personality although for tax purposes it is deemed to be a corporate body (Section 45 of the Income Tax Act 1995).
• The Trusts Act 2001 covers trusts created by resident settlors or non-resident settlors. Previously there were two separateacts of Parliament governing trusts: Trusts Act 1989 (onshore trusts) and Offshore Trusts Act 1992 (offshore trusts). The Trusts Act 2001 amends the Code Civil Mauricien to avoid conflict of laws. There is now the concept of ‘fiducie’ in the latter.
C. Distinction between Trusts and other Legal Concepts
D. Civil Law Alternatives to...