Trusts – how they have helped in the past and can help now.
Trusts were well established in Roman law in terms of “testamentary trusts” created by Wills. An example of this are the Protective Property Trusts. The concept of “inter vivos trusts” which can be set up and used while the donor is still alive was developed by later common law jurisdictions and is the sort of Trust used in the Legacy Protection Plan Trusts.
Personal trust law developed in England at the time of the Crusades, during the 12th and 13th centuries.
At the time, land ownership in England was based on the feudal system. When a landowner left England to fight in the Crusades, he needed someone to run his estate in his absence, often to pay and receive feudal dues. To achieve this, he would convey ownership of his lands to an acquaintance, on the understanding that the ownership would be conveyed back on his return. However, Crusaders would often return to find the legal owners’ refused to hand back the the property!
Unfortunately for the Crusader, English common law did not recognize his claim. As far as the King’s courts were concerned, the land belonged to the trustee, who was under no obligation to return it. The Crusader had no legal claim. The disgruntled Crusader would then petition the King, who would refer the matter to his Lord Chancellor. The Lord Chancellor could do what was “just” and “equitable”, and had the power to decide a case according to his conscience. At this time, the principle of equity was born.
As was the Modern Trust.
The Lord Chancellor would consider it “unconscionable” that the legal owner could go back on his word and deny the claims of the Crusader (the “true” owner). Therefore, he would find in favor of the returning Crusader. Over time, it became known that the Lord Chancellor’s court (the Court of Chancery) would continually recognise the claim of a returning Crusader. The legal owner would hold the land for the benefit of the original owner, and would be compelled to convey it back to him when requested. The Crusader was the “beneficiary” and the friend the “trustee”. The term use of land was coined, and in time developed into what we now know as trusts.
This forms the basis of the specialised Trust we use for Estate Planning purposes today, which can massive improve the ability of wealth to “cascade down the generations.”
So why not find out how Trusts can help your family today? 01323 741203