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TRUST - Coggle Diagram
TRUST
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What is a trust?
Equitable duty relating to property (temporary)
- Property Component - trustee holds proprietary interest ‘on trust’ for the beneficiary
Trustee = legal interest
Beneficiary = equitable interest
- Obligation Component - trustee owes equitable obligations to the beneficiary (hold property for their benefit)
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Key uses
Commercial arrangements
Share ownership
Investment funds
Pension funds
Other forms of tax-efficient employee remuneration
Corporate tax avoidance
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A trust ceases to exist if, without any fault on the part of the trustee, the trust property is destroyed or consumed.
In contrast, if the trustee is at fault, they will be personally liable to restore the trust property (using their own funds). If they cannot, they will need to pay compensation.
Enforcement
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Property does not form part of the trustee’s estate for the purposes of the bankruptcy and insolvency regimes. It therefore cannot be distributed to the trustee’s creditors
Beneficiary's equitable proprietary interests cannot be enforced against a purchaser of a legal interest who does not have notice of the trust
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