Chapter

The Boundaries of the Trust Concept

M. W. Lau

in The Economic Structure of Trusts

Published in print January 2011 | ISBN: 9780199602407
Published online May 2011 | e-ISBN: 9780191725203 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199602407.003.0010
The Boundaries of the Trust Concept

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This chapter explores leading trust developments using the property-based account. It first explains the nature of the beneficial interest, which is a residual claim to the assets in the trust fund, subject to claims of trustees, creditors, and other beneficiaries. It further elaborates on why trusts must eventually terminate and why developments such as perpetual trusts and non-charitable purpose trusts are flawed. This chapter also examines trustee exemption clauses and argues that, from an efficiency perspective, they are acceptable only if another party becomes responsible for the trustee's exempted activities. Finally, it argues that there are boundaries to how much a settlor can influence and control a trust. Trusts purportedly for beneficiaries are no longer so when beneficiaries cannot be certain that they hold the residual claim to assets in the trust fund.

Keywords: beneficial interests; residual claim; trust termination; perpetual trusts; non-charitable purpose trusts; trustee exemption clauses; settlors; beneficiaries

Chapter.  6972 words. 

Subjects: Trusts Law

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