A trust has been defined, in its technical sense, as the right enforceable solely in equity to the beneficial enjoyment of property of which the legal title is in another (Bispham, "Equity", p. 68), and as a right of property, real or personal, held by one party for the benefit of another. ( Bouvier, "Law Dict.", s. v. Trusts .) It implies two interests, one in equity and one in law — an individual to hold the legal title, who is known as the trustee, and another as beneficiary, known as the cestui que trust . The term "trust" is applied sometimes to the equitable title, the obligation of the trustee, or the right which is held in trust. For the creation of a valid trust there are three essentials: a definite subject matter within the disposal of the settlor; a lawful definite object to which the subject matter is to be devoted; clear and unequivocal words or acts devoting the subject matter to the object of the trust (28 Am. and Eng. Ency. of Law, 866, title "Trusts and Trustees"). No specific words are required in the creation of a trust, but they must be sufficient to express the present intent to place a beneficial interest in a specific property in the hands of a trustee beyond the control of the person or persons who are to enjoy the benefit thereof. Any property, real, personal, or equitable, may be the subject of a trust, except in a few cases where statutes have provided to the contrary.
The English Statute of Frauds, which has been enacted in most of the United States in some of its provisions, provides that all trusts of land should be proved and manifested by writing. But trusts of personal property are not within the statute; therefore a valid trust of such property may be created verbally, but transfers of existing trusts must be in writing. Under the Roman Law trusts were created for the purpose of empowering certain individuals to inherit property. These trusts were known as fidei commissa and for their benefit a separate equitable jurisdiction was established. There has been some controversy as to whether the English trust is an outcome of the Roman institution or not. The difference between the two is that the latter is a means of carrying out substitutions, while the former separates the ownership and enjoyment of the benefits of an estate, the fundamental idea at the root of both being much the same. This system seems to have appeared in England under the reign of Edward III, for the purpose of avoiding the Statutes of Mortmain, which had been passed to check the growth of landed estates in the hands of religious houses. These trusts were abolished, except as to certain gifts or grants, by the passage of the Statute of Uses, known as the 27th Henry VIII, which held that any person entitled to the use of an estate should have the title to it. This statute has either been recognized as part of the common law in most of the United States through judicial interpretation or been enacted by legislation.
Trusts are either executed or executory, express or implied. In an executed trust the instrument must be interpreted according to the rules of law, even though the intention may be defeated. A court of equity will take jurisdiction for the purpose of carrying out executory trusts and seeing that the instrument which purports to fulfil the intention of the settlor really does so, and will reform conveyances where the intentions of the settlor have not been clearly set out. An express trust is one which is created by the direct words of the settlor. Implied trusts are those which arise when the terms or circumstances do not specifically express but simply imply a trust. Where the entire intention of the trust cannot be carried out without violating some rule of law or public policy, equity will carry it out as nearly as possible. Constructive trusts arise by a construction put by a court of equity on the conduct of the parties. The Statute of Frauds 29th Charles II requires that declarations of trust of lands should be proved by writing.
Any person worthy of confidence and possessed of the power to hold real or personal property may be a trustee, the sovereign in England, any of the states of the United States, and perhaps the Federal Government, a public officer in his private capacity or the settlor himself; even the beneficiary or cestui que trust may act as trustee providing there are other beneficiaries besides himself; so too a corporation may act in this capacity if not precluded by the terms of its charter. Municipal corporations have been trustees but the general trend of authority is to the contrary. Married women may be trustees and, acting under the direction of the court, an infant, alien, or lunatic. In cases where no trustee has been named, or for some reason the office has become vacant, the court will supply the deficiency rather than allow the trust to fall, it being inherent in a court of equity to exercise this power, while in many jurisdictions it has been specifically granted by statute. As a general rule, the trustee is appointed by the settlor and provision made for his successors. The settlor may designate whomsoever he wishes and vest in that person the power to appoint succeeding trustees, though sometimes the power is placed with the cestui que trust and sometimes with the settlor. The number of trustees is governed by the provisions of the instrument of the trust, but as a general thing the courts look unfavourably upon single trustees, particularly in the cases of large estates or those for infants or lunatics.
There is no particular method by which a trustee accepts a trust. His actions in the matter are usually equivalent to acceptance, although sometimes he joins in the instrument if it is a conveyance. There are, however, but three ways by which he may be relieved: first, the consent of all parties in interest; second, by virtue of the provisions of the instrument of trust; and third, with the consent of the court. The old rule in England forbade a trustee retiring on his own motion, but the modern rule is different except where it is impossible to provide a substitute. The conduct sufficient for the removal of a trustee from his office must be such as to endanger the trust funds, and the courts will not look favourably upon light or frivolous whims and disagreements among the parties. The powers of trustees are general and special — those which arise by construction of law incident to the office, and those provided by the settlor. Any person who has capacity to hold property may be a cestui que trust , although some jurisdictions restrict the rule to minors or other incompetents. He must be definitely ascertained either in person or as a class, but need not be actually in being at the date of the settlement. A sovereign, any of the states of the United States, or the Federal Government may be a beneficiary, or a corporation so far as personal property is concerned, and also as to real estate within the limits of its charter privilege or unless prohibited by statute. An unincorporated society, however, cannot be a cestui que trust except in the case of a charitable or religious society. The beneficiary has a right to alienate or encumber his estate unless the terms of the trust expressly or impliedly forbid or there is a statute which interferes; so too he may assign his interest or even alienate the income before it becomes due.
The cestui que trust or beneficiary has three remedies in the event of a breach of trust on the part of his trustee. He may follow the specific estate into the hands of a stranger to whom it has been wrongfully conveyed; he has the right of attaching the property into which the estate may have been converted ; and the further right of action against the trustee personally for reimbursement. As between him and the trustee there is no time limit when an action may be brought. It is the rule that purchasers must see to the application of the purchase money in the cases of trust estates, such as where it is provided that the funds be for the payment of specific legacies or annuities or debts. In some jurisdictions this rule has been abrogated by statute. Technical terms are not necessary in a devise to create a trust but if used will be interpreted in their legal and technical sense. General expressions, however, will not establish a trust unless there appears a positive intention that they should do so. Bequests in trust for accumulation must be confined within the limits established against perpetuities. A settlor can only extend the trust for the life or lives in being and twenty-one years, and any attempt to extend the trust beyond this period vitiates it in toto . By statute, accumulations are forbidden in some jurisdictions excepting during the minority of the beneficiary or for other fixed periods ( Bouvier, "Law Dict.", s. v. Perpetuity ).
As a rule, the interest of a beneficiary is liable for the payment of his debts, but this does not prevail in a majority of the United States . Spendthrift trusts, as they are called, being for the protection of the beneficiary against his own improvidence, are sustained in these jurisdictions. Since the Statute of Wills equitable interests are devisable only in writing. How far a devisee of a trust estate can execute the trust depends on the intention of the settlor expressed in the instrument. General words will not pass a trust estate unless there is a positive intention that it should so pass. In order to create a valid trust by will, the instrument must be legally executed and admitted to probate. There is this distinction between wills and declarations of trusts. The former, being ambulatory, take effect only on the death of the testator, the latter at the time of execution. Formerly under the common law an executor had title to all personal property of the decedent, and was entitled to take the surplus after the payment of debts and legacies ; now, by statute he is prima facie a trustee for the next of kin. Although a trustee is, in theory, allowed nothing for his trouble, his commissions are, in point of fact, generally fixed by statute and he is allowed his legitimate expenses. See CHARITABLE BEQUESTS; LEGACIES.
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