HISTORY OF INHERITANCE: PART III
History of Trusts
T
By Harry L. Munsinger, J.D., Ph.D.
rusts are a widely recognized concept under American law. However, unlike intestate succession and formal wills, discussed in Parts I and II of this series, trusts have a more recent genesis as a means of transferring property to descendants. Black’s Law Dictionary defines a trust as “[a] legal entity created by a grantor for the benefit of designated beneficiaries under the laws of the state and the valid trust instrument. The trustee has a fiduciary responsibility to manage the trust’s corpus assets and income for the economic benefit of all of the beneficiaries.”1 A trust document must be in writing and signed by the settlor and trustee. Ancient Roman law permitted citizens to establish trusts by will to hold property for their descendants, but these trusts only became effective after the testator’s death. By the Middle Ages, English lawyers and their clients wanted the concept of trusts to allow the Church to use and enjoy land legally, to enforce agreements between crusading knights and their trustees, and to avoid the fees associated with feudal tenure. To enforce these informal agreements, English kings established equity courts that gradually changed the common law by deciding that legal title to land could be separated from equitable use and enjoyment of land, establishing the legal right to hold land in trust for the use of others. Ecclesiastical courts were the first to uphold trust agreements, but later, chancery courts were established to resolve conflicts between ecclesiastical and common law courts and to define the fiduciary duties of trustees.
Creation of Trusts Early English common law did not allow separation of legal title and equitable use of land.2 This presented problems for knights who needed someone to manage their lands while they were away on crusades to the Holy Land, so they entered into informal agreements with trustees. The legal issue became acute when knights returning from the crusades discovered that some dishonest trustees were refusing to return their lands according to the informal agreements. To deal with this injustice, English kings established equity courts to resolve these cases in a just way rather than through the common law. Equity court decisions gradually developed a body of law protecting the settlor and beneficiary from a dishonest trustee, eventually creating the English doctrine of trusts.
Black’s Law Dictionary defines a trust as “[ a] legal entity created by a grantor for the benefit of designated beneficiaries under the laws of the state and the valid trust instrument. The trustee has a fiduciary responsibility to manage the trust’s corpus assets and income for the economic benefit of all of the beneficiaries.” At the same time, English common law and Norman feudal tenure placed restrictions upon the ownership and conveyance of land, which were detrimental to the Catholic Church’s interests. Under Norman feudal law, taxes on land were assessed primarily when land passed by grant or inheritance. If land could be owned by an entity that never died, the sovereign could never collect taxes on it. Therefore, religious entities, including the Catholic Church, were forbidden from owning land under the Mortmain Acts3 passed by Parliament in the thirteenth century. Additionally, many religious orders had taken vows of poverty, and publicly owning large tracts of land was inconsistent with a life of poverty. When parishioners bequeathed real property to the Catholic Church, the Church avoided the legal restrictions and moral contradictions by gifting title to real estate to a layman trustee for “use” by the Church, which created an informal trust arrangement. However, these informal agreements could not be enforced in a common law court, so Church leaders began looking for alternate legal ways to make a trustee adhere to his agreement. Finally, trusts were also developed to avoid feudal taxes. Norman laws entitled the king to cash payments under the following circumstances: (1) feudal land descended from a father to his son; (2) a wardship was established for a minor; (3) a daughter married; (4) the eldest son was knighted; or (5) a lord was captured and held for ransom. By establishing a trust to hold his land, the feudal tenant hoped to avoid these financial September–October 2020
|
San Antonio Lawyer 19
