On Purpose Trust

The Trust system derives from the Uses device of the England in the Middle Ages. In its early days, Trust system served primarily as a fortune transferring way to avoid the feudal limit, which had an obvious intent to avoid the law. As the development of the society, Trust system has become an important property management system. A lot of countries have accepted such a legal system for its flexibility and efficiency. Generally, in order for a trust to be valid there must be identifiable beneficiaries. Li recent times, however, a number of offshore financial centers have enacted legislation to permit the creation of non-charitable purpose trusts.The traditional theory strikes down purpose trust on the base of the following two factors:(l)purpose trust violate the Beneficiary Principal (2)purpose trust violate the Rule Against Perpetuities. In many common law jurisdictions, there are two ways to cope with the first barrier. One is to construe purpose trust with various theories as not violate the Beneficiary Principal. The other is to replace the Beneficiary Principal with Enforcer Principal. To the second barrier, many jurisdictions set a duration limit to satisfy the rule. Meanwhile, some jurisdictions held the purpose trust can last for ever. In the continental jurisdictions which had introduced Trust system, purpose trust can last for ever because there are no traditional restrictions.The nature of purpose trust(short for non-charitable purpose trust)is that the trust property is held by trustees on trust to carry out specific purposes which do not quality as charitable purposes.The essential requirements of a valid purpose trust are referred to as the "three certainties" namely, certainty of intent; certainty of trust property; certainty of object. As a new land of trust, purpose trust inherits some traditional concepts and develops them as well as introduces some new concepts. This article will probe into the character of purpose trust focusing on the following four aspects: purpose, duration, designated person, enforcer. Because some of these aspects are exclusive to purpose trust while others are quite different from other kinds of trust.The early purpose trusts are some exceptions set by courts in England whilemodern purpose trust originates from offshore financial centers. There are two main applications of modern purpose trust (l)to accrue economic benefit for itself;(2)to act as a buffer. It is these unique functions make purpose trust popular in offshore financial centers. It also causes Britain, American, Canada to adjust their own trust laws and theories to follow the trend.China set up Trust law in the year of 2001, but it dose not accept the concept of purpose trust. Viewed from the history of trust, the nature of trust is to satisfy individual's pursuit of economy freedom. Under the climate of establishing a democratic , legal society and a market economy system, individual's sense of right become prominent, individual's resource and fortune accumulate great, property right of enterprise become independent in China. All of these factors require the establishment of a new kind of property management device based on freedom and efficiency. Purpose trust has a great elastic space on the ground of a much greater choice of purpose, which can make full use of the advantage of trust system. Hence, it is necessary to introduce purpose trust to China.