Academic journal article European Journal of Sustainable Development

Trust as E Relationship Treated by Common Law Legal Systems and as a Relationship Treated by Civil Law Legal Systems. Things in Common and Comparison between the Two Systems

Academic journal article European Journal of Sustainable Development

Trust as E Relationship Treated by Common Law Legal Systems and as a Relationship Treated by Civil Law Legal Systems. Things in Common and Comparison between the Two Systems

Article excerpt

1. Introduction

Trusts have existed since Roman times and have become one of the most important innovations in property law. The concept of trust is derived by the terms of "testamentary trusts" created by wills. 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. Personal trust law developed in England at the time of the Crusades, during the 12th and 13th centuries.

In medieval English trust law, the settlor was known as the feoffor to uses while the trustee was known as the feoffee to uses and the beneficiary was known as the cestui que use, or cestui que trust. In some countries trust relationship is treated while in other countries it is not developed as relationship. However this institution is not only a "local" institution treated only by Common Law system, but is also developed by Civil Law system and mixed1 system. A trust is a relationship whereby property is held by one party for the benefit of another. Trust is a legal relationship created on the basis of trust that exists between the founders of this relationship (trustor) and the trustee. The trustor realizes the transfer, inter vivos or mortis causa, of property or of his rights in favor of trustee. Trust can be considered even as a hybrid between contract and property.The trustor has the right of the trust's administration as if he was the owner. But this thing is realized in the benefit of the beneficiary or the achievement of a certain purpose.It can happen to have trust where is not determined the final beneficiary. In the Continental Europe there are similar institutions with trust such as dutch institution fiducia cum amico or fideicommissum, fiducia and treuhand and even the legal institution of german right, bewind. Trust can even be compared with the contract in favor of a third person that is treated by the Albanian Civil Code and with the will. Trust with both these institutions has things in common and differences. In this article it will be analyzed trust institution, its treatment according common law and its treatment according civil law.

2. Trust and its main elements

Property of any sort may be held in a trust. The uses of trusts are many and varied, for both personal and commercial reasons. The main objective of creating a trust is that the fruits derived from its administration will be transferred to the benificiary. Then after reaching a certain age or over a specified time or the completion of a certain condition the property's ownership will be transferred in a full way to the benificiary. Two elements that characterize trust's institution are : a) transfer of a certain property; b) administration of that property for the benefit of beneficiary. The parties that participate in this relationship are: 1) Settlor (trustor)- this is the person who creates the trust by giving real or personal property in trust to a trustee for the benefit of a beneficiary and who gives such property is said to settle it on the trustee.

A trustee- a person (either an individual, a corporation or more than one of either) who administers a trust. A trust may have multiple trustees, and these trustees are the legal owners of the trust's property, but have a fiduciary duty to beneficiaries and various duties, such as a duty of care and a duty to inform2.

A trustee is considered a fiduciary and owes the highest duty under the law to protect trust assets from unreasonable loss for the trust's beneficiaries.The trustee does not have the right of a full ownership as at the end of the trust he is obliged to transfer this property to the beneficiary.

A beneficiary- is a person that is not part in the relationship initially established by the two above-mentioned parties, but is the direct interested as he is the person that either immediately or eventually, will receive income from the trust property, or will receive the property itself. …

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