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The Economic Structure of TrustsTowards a Property-based Approach$
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M. W. Lau

Print publication date: 2011

Print ISBN-13: 9780199602407

Published to Oxford Scholarship Online: May 2011

DOI: 10.1093/acprof:oso/9780199602407.001.0001

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The Boundaries of the Trust Concept

The Boundaries of the Trust Concept

(p.165) 9 The Boundaries of the Trust Concept
The Economic Structure of Trusts

M. W. Lau

Oxford University Press

This chapter explores leading trust developments using the property-based account. It first explains the nature of the beneficial interest, which is a residual claim to the assets in the trust fund, subject to claims of trustees, creditors, and other beneficiaries. It further elaborates on why trusts must eventually terminate and why developments such as perpetual trusts and non-charitable purpose trusts are flawed. This chapter also examines trustee exemption clauses and argues that, from an efficiency perspective, they are acceptable only if another party becomes responsible for the trustee's exempted activities. Finally, it argues that there are boundaries to how much a settlor can influence and control a trust. Trusts purportedly for beneficiaries are no longer so when beneficiaries cannot be certain that they hold the residual claim to assets in the trust fund.

Keywords:   beneficial interests, residual claim, trust termination, perpetual trusts, non-charitable purpose trusts, trustee exemption clauses, settlors, beneficiaries

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