page_title: English trust law
section_title: Content
hierarchical_section_title: English trust law / Content
caption_attribution_description: English: A 6 (2x3) segment panoramic view of the three tallest skyscrapers in Canary Wharf, London, as viewed from Cabot Square. Taken by myself with a Canon 5D and 17-40mm lens at 22mm, and stitched with PTGui (mercator projection).
context_page_description: English trust law concerns the creation and protection of asset funds, which are usually held by one party for another's benefit. Trusts were a creation of the English law of property and obligations, but also share a history with countries across the Commonwealth and the United States. Trusts developed when claimants in property disputes were dissatisfied with the common law courts and petitioned the King for a just and equitable result. On the King's behalf, the Lord Chancellor developed a parallel justice system in the Court of Chancery, commonly referred as equity. Historically, trusts were mostly used where people left money in a will, created family settlements, created charities, or some types of business venture. After the Judicature Act 1873, England's courts of equity and common law were merged, and equitable principles took precedence. Today, trusts play an important role in financial investments, especially in unit trusts and pension trusts, where trustees and fund managers usually invest assets for people who wish to save for retirement.
context_section_description: Once a trust has been validly formed, the trust's terms guide its operation. While professionally drafted trust instruments often contain a full description of how trustees are appointed, how they should manage the property, and their rights and obligations, the law supplies a comprehensive set of default rules. Some were codified in the Trustee Act 2000 but others are construed by the courts. In many instances, English law follows a laissez-faire philosophy of "freedom of trust". In general, it will be left to the choice of the settlor to follow the law or to draft alternative rules. Where a trust instrument runs out or is silent, the law will fill the gaps. In contrast, in specific trusts, particularly pensions within the Pensions Act 1995, charities under the Charities Act 2011, and investment trusts regulated by the Financial Services and Markets Act 2000, many rules regarding trusts' administration, and the duties of trustees are made mandatory by statute. This reflects the view of Parliament that beneficiaries in those cases lack bargaining power and need protection, especially through enhanced disclosure rights. For family trusts, or private unmarketed trusts, the law can usually be contracted around, subject to an irreducible core of trust obligations. The scope of compulsory terms may be subject of debate, but Millett LJ in Armitage v Nurse viewed that every trustee must always act "honestly and in good faith for the benefit of the beneficiaries". In addition to general principles of good administration, trustees' primary duties include fulfilling a duty of "undivided loyalty" by avoiding any possibility of a conflict of interest, exercising proper care, and following the terms of the trust to fulfil their purpose.
caption: As the Charity Commission and The Pensions Regulator do for charities and pensions,[201] the Financial Conduct Authority in Canary Wharf enforces statutory and fiduciary duties owed by investment businesses under the FSMA 2000. Most duties derive from trust law, but statute makes them compulsory and the regulator ensures compliance.
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