What is trust law
In common law legal systems, a trust is the relationship between one’s property and the transfer of that property into a legally binding entity. In order for the entity to become legally binding, it must be compliant with the relevant laws of its jurisdiction. Trust law is defined as the legal regulatory framework adopted by each jurisdiction which allows for the set up of such an entity.
For more information please view our Offshore Trust Guide.
Principles of trust law
When setting up a trust, the entity will be subject to the laws and regulations of the jurisdiction that it is established in. Trust law provides the terms by which a trust can be established and managed in that country. It is essential that all wealth management and asset protection strategies developed and established within a specific country are compliant with the relevant laws and acts.
In most jurisdictions, trust law will adopt a similar structure, by which it will provide regulations with regards to the creation and administration of a trust and the distribution of assets from the deed to its beneficiaries. The scope of trust law extends to the formalities of the entity, the requirements and role of a trustee, the applicable beneficiaries, various types of trusts, the terms and conditions and the types of trusts available.
Most trust laws will stipulate the types of assets that can be held within the entity. Also provided for under law is the permitted duration of the entity and the potential for estate planning through the use of such an entity.
Trust law has several areas of enforcement with regards to the administration and regulation of the entity. In the case where the appointed trustee does not administer the structure in accordance with the relevant law, prosecution and remedies can be sought.
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