“Trust” – & Related Definitions

Definition of TRUST:

n. (15c.) 1. The right, enforceable solely in equity, to the beneficial enjoyment of property to which another person holds the legal title; a property interest held by one person (the trustee) at the request of another (the settlor) for the benefit of a third party (the beneficiary). For a trust to be valid, it must involve specific property, reflect the settlor’s intent, & be created for a lawful purpose. The two primary types of trusts are private trusts & charitable trusts. 2. A fiduciary relationship
regarding property & charging the person with title to the property with equitable duties to deal with it for another’s benefit; the confidence placed in a trustee, together with the trustee’s obligations toward the property & the beneficiary.  A trust arises as a result of a manifestation of an intention to create it. 3. The property so held;”[1]

     Excerpt from William C. Dunn’s Trusts for Business Purposes:

     “In its technical sense, a trust is the right, enforceable solely in equity to the beneficial enjoyment of property, the legal title of which is vested in another and implies separate coexistence of the legal and the equitable titles vested in different persons at the same time; in its more comprehensive
sense the term embraces every bailment, every transaction by agent or factor, every deposit, and every matter in which the slightest trust or confidence exists. The word trust, however, is frequently employed to indicate duties, relations, and responsibilities which are not strictly and technically trusts.”[2]

    Excerpt from Tony Honoré’s The South African Law of Trusts:

     “One must distinguish,… [in] countries where English is spoken, between a wide and a narrow sense of the word ‘trust.’  In the wide sense a trust exists when property is to be held or administered by one person on behalf of another or for some purpose other than his own benefit… In the narrow or strict
sense a trust exists when the creator of the trust… hands over or is bound to hand over the control of an asset which, or the proceeds of which, is to be administered by another (the trustee
or administrator) in his capacity as such for the benefit of some person (beneficiary) other than the trustee or for some impersonal object. A trust in this sense is a species of the genus ‘trust’ in the wide sense.“[3]

     Excerpt from Austin W. Scott & William F. Fratcher’s The Law of Trusts:

     “Some courts and legal writers have defined a trust as a certain kind of right that the beneficiary has against the trustee, or a certain kind of interest that the beneficiary has against the trustee, or a certain kind of interest that the beneficiary has in the trust property, thus looking at it from the point of view of the beneficiary. While it is true that the beneficiary has the right or interest described, the trust is something more than the right or interest of the beneficiary.  The trust is the whole juridical device: the legal relationship between the parties with respect to the property that is its subject matter, including not merely the duties that the trustee
owes to the beneficiary and to the rest of the world, but also the rights, privileges, powers, and immunities that the beneficiary has against the trustee and against the rest of the world. It would seem proper, therefore, to define the trust either as a relationship having certain characteristics stated in the definition or perhaps as a juridical device or legal institution involving such a relationship.”[4]

     Excerpt from Restatement (Third) of Trusts:

     “In the strict, traditional sense, a trust involves three elements:

(1) a trustee, who hold the trust property & is
subject to deal with it for the benefit of one or
more others
(2) one or more beneficiaries, to whom & for
whose benefit the trustee owes duties with respect to the trust property
(3) trust property, which is held by the trustee for
the beneficiaries.  In a more comprehensive sense, the trust purpose is often included in discussions of the elements of the trusts…  Although all of these elements are present in a complete trust, either or both of elements (1) and (2) above may be temporarily absent without destroying the trust or preventing its creation.”[5]

Definition of FIDUCIARY RELATIONSHIP:

“A relationship wherein one person is under a duty to act for the benefit of another on matters within the scope of the relationship, which requires an unusually high degree of care. Fiduciary relationships – such as trustee-beneficiary, guardian-war, principal-agent, & attorney-client –
require an unusually high degree of care. Also termed fiduciary relation; confidential
relationship. Fiduciary relationships usually arise in one of four situations:

1.) when one person places trust in the faithful integrity of another, who as a result gains superiority or influence over the first
2.) when on person assumes control & responsibility over another
3.) when one person has a duty to act for or give advice to another on matters falling within the scope of the relationship
4.) when there is a specific relationship that has traditionally been recognized as involving fiduciary duties, as with a lawyer & a client or a stockbroker & customer.”

Definition of FIDUCIARY:

“1. Someone who is required to act for the benefit of another person on all matters within the scope of their relationship; one who owes to another the duties of good faith, loyalty, due care, & disclosure  2. Someone who must exercise a high standard of care in managing another’s money or property.”

     Excerpt from D.W.M. Waters’ The Constructive Trust; The Case for a New Approach in English Law:

     “The term ‘fiduciary’ is so vague that plaintiffs have been able to claim that fiduciary obligations have been breached when in fact the particular defendant was not a fiduciary stricto sensu but simply had withheld property form the plaintiff in an unconscionable manner.”[6]

Definition of GUARDIAN:

“Someone who has the legal authority & duty to care for another’s person or property, especially because of the other’s infancy, incapacity, or disability.”

Definition of WARD:

“A person, usually a minor, who is under a guardian’s charge or protection.”

Definition of BENEFICIARY:

n. (17c.) 1. Someone who is designated to receive the advantages from an action or change; especially one designated to benefit from an appointment, disposition, or assignment (as in a will, insurance policy, etc.) or to receive something as a result of a legal arrangement or instrument.  2. A person to whom another is in a fiduciary relation, whether the relation is one of agency, guardianship, or trust, especially a person for whose benefit property is held in trust.  3. Someone who is initially entitled to enforce a promise, whether that person is the promisee or a third party.  4. Someone who is entitled under a letter of credit to draw or demand
payment.  5. Someone designated to receive money or property from a person who has died. – beneficiary, adj.

Definition of TRUSTEE:

n. (17c.) 1. Someone who stands in a fiduciary or confidential relation to another; especially
one who, having legal title to property, holds it in trust for the benefit of another & owes a fiduciary duty to that beneficiary.  Generally, a trustee’s duties are to convert to cash all debts & securities that are not qualified legal investments, to reinvest the cash in proper securities, to protect & preserve the trust property, & to ensure that it is employed solely for the beneficiary, in accordance with the directions contained in the trust instrument.”

     Excerpt from William W. Story’s A Treatise on the Law of Contracts:

     “A trustee is bound to perform all acts which are necessary for the proper execution of his trust.  But by the English rule, as he is not allowed compensation for his services, he would stand in
the position of a gratuitous bailee, & be responsible only for losses or improper execution of his trust, in cases of gross negligence.  The rule denying him compensation does not, however, obtain generally in America, and it is the general practice in America to allow commissions to trustees in cases of open and admitted trusts, where the trustee has not forfeited
them by gross misconduct.  It would seem, that in all the States where a compensation is given, he would be a bailee for hire of labor and services, and bound to exercise ordinary diligence.  And he engages that he has sufficient skill to execute the duties of his
office properly. And, indeed, a trustee seems generally to be bound to take the same care of the trust fund as a prudent & discreet man would take of his own property, to manage it for the best interest of the cestui que trust, & to make no profit or
advantage out of it for himself personally.”[7]

References:

[1]: All definitions from: Black’s Law Dictionary Deluxe Tenth Edition by Henry Campbell Black & Editor in Chief Bryan A. Garner. ISBN: 978-0-314-62130-6

[2]: William C. Dunn, Trusts for Business Purposes 2 (1922)

[3]: Tony Honoré, The South African Law of Trusts 55 1-2, at 1-3
(3d ed. 1985).

[4]: 1 Austin W. Scott & William F. Fratcher, The Law of Trusts 5
2.4, at 42 (4th ed. 1987)

[5]: Restatement (Third) of Trusts 5 2 cmt. f (2003)”40

[6]: D.W.M. Waters’ The Constructive Trust; The Case for a New Approach in English Law

[7]: 1 William W. Story, A Treatise on the Law of Contracts 5 374, at 328-30 (1874)

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