Asset partitioning in the trust

Thesis

Asset partitioning in the trust, the question of how creditors of trustees attach their claims to trust assets, is an elaboration of the fundamental structure of trust law. The trust creates a surrogate for separate corporate personality by using elements of personal liability of the trustee towards external creditors and towards the beneficiaries of the trust. The beneficial interest and its assignability ensure fluidity in the membership of the group enterprise. Through ingenious use of equitable doctrine, the trust has become a vehicle by which parties external to the trust need only concern themselves with their legal relations to the trustee, without regard to the internal obligational contours of the trust.

This thesis explores the doctrinal operation of these rules and seeks to make both practical recommendations for streamlining certain unclear or inconsistent doctrines, and theoretical points regarding broader trust law debates. To this end it enlists comparative prespectives from American law, where changes in central asset partitioning features have led to wide-ranging changes in the structure of trust law.

It argues that the basic structure of creditor access to trust assets does not support the view that the beneficiary has equitable ‘property right’ in the trust assets, nor that the trust fully segregates the assets of the trust from those of its members. Instead, the trust creates an order of priorities for creditor access with access being determined by the fulfilment of the trust’s purposes, and the beneficiary’s position is transmissible but obligational.

The law discussed in this thesis showcases the inadequacy of traditional private law analysis of definable correlative rights as regards the trust. The emerging picture is complex, subtle and elegant, and worthy of future study.

Authors: Ollikainen, A

• Type of award: DPhil
• Level of award: Doctoral
• Awarding institution: University of Oxford
• Language: English
• Keywords: Asset Partitioning; Trust creditors; Trustee Indemnity; Creditors' claims; Beneficiary's creditors
• Subjects: Trust Creditors; Trust law