Commercial uses of trusts
Commercial uses of trusts

The following Private Client guidance note provides comprehensive and up to date legal information covering:

  • Commercial uses of trusts
  • What is a trust?
  • Commercial advantages of a trust
  • Trusts for investment purposes
  • Security trusts
  • Business purpose trusts
  • Identifying trust assets—tangible and intangible property
  • Rights of beneficiaries under a trading trust
  • Rights of creditors of a trading trust
  • Liability of beneficiaries to third parties
  • more

The common law trust has long been a feature in many kinds of commercial arrangements. It has certain unique characteristics which set it apart from other legal relationships, such as contract, agency and bailment. This Practice Note sets out some of the many uses to which it has been, and may yet be possible, to put a trust which is created intentionally in order to fulfil a commercial purpose. Trusts that are created by operation of law regardless of the parties' intention are outside the scope of this Practice Note.

What is a trust?

See Practice Note: An introduction to trusts for commercial lawyers for information on what a trust is, the different types of trust and the requirements for a valid trust. This Practice Note also outlines the role of trustees and the extent of the trustees’ powers and liabilities.

Commercial advantages of a trust

Certain features of the trust make it a very useful vehicle for commercial purposes. See Practice Note: Trusts as a vehicle for holding company shares for an overview of situations where trusts, including non-charitable purpose trusts, hold shares in order to achieve a commercial purpose.

Separate patrimony

The segregation of the trust fund so that it does not form part of the patrimony of either the trustee or the beneficiary is an extremely valuable