History of Trusts - Law Office of David Sarazen

The History of Trusts
English Common Law
The trust as we know it today developed at the time of the Crusades, when land ownership in England was
still based on the feudal system. At that time, the term trust was known as the “use of land.” When a
landowner left his estate to fight in the Crusades, he required a person to run the estate in his absence, and
to pay and receive the feudal dues. To this end, he would convey, or transfer, his estate to a friend with the
understanding that the land would be returned to him when he came back. However, the common law
courts of England did not recognize the claim of the returning crusader. As far as the courts were
concerned, the only owner of the land was the friend with whom the land had been left and the original
owner had no claim on it. The only recourse of the disgruntled landowner was to petition the king who held
power to “do justice “ among his subjects. The king would refer the matter to his Lord Chancellor, who
would decide each case according to his conscience. Over time a system of precedent grew up around the
Chancellor's decisions and it came to be recognized that the Chancellor's court would recognize the claim of
the returning landowner on the ground that it was unconscionable for the legal owner of the estate to deny
the claim of the “true” owner.
Trusts in America
The first settlers in America brought English custom and law with them across the Atlantic, which included
the concepts of probate and trusts. The first trust of record was drafted for Governor Robert Morris of the
Virginia Colony, a prominent financier of the American Revolution, by the famous attorney and patriot,
Patrick Henry, in 1765, 24 years before the adoption of the Constitution. That trust, known as the North
American Land Company, is still in operation today.
The Revocable Living Trust
The most prevalent trust established today is the revocable living trust. Living trusts are established
primarily to avoid probate and to minimize taxes, although other uses such as donating to charities or
helping with the special needs of beneficiaries are also common. In its basic form, a trust is a relationship
in which a person (the trustee) holds legal title to property (the trust corpus), but is bound by a fiduciary
duty to exercise legal control for the benefit of one or more individuals (the beneficiaries), who holds
"beneficial" or "equitable" title. The trust is governed by the terms of the trust agreement and local law. The
person or entity that creates the trust is called the Settlor. In the case of a revocable living trust, the initial
trustee is usually the same person as the Settlor and current beneficiary. When the Settlor dies, the trust
becomes irrevocable. At that point, the successor trustee pays the Settlors debts and taxes, and then
distributes the residue of the estate to the remainder beneficiaries named in the trust instrument.
Many famous and not-so-famous people have created trusts to maintain their privacy, minimize taxes, and
to provide for future generations. The next time you drive by Sunset Boulevard on the San Diego Freeway
look up to see the Museum established by the J. Paul Getty trust. Other notable figures include Bing
Crosby, Elvis Presley, John D. Rockefeller, Frank Sinatra, John F. Kennedy, John Lennon, Babe Ruth,
President Ronald Reagan, Walt Disney, and of course, yours truly, David Sarazen.
David Sarazen, Attorney at Law
(310) 972-0241
Copyright 2012