The Independence Of The Trust Property

Abstract Originating from the Anglo-American Equity Law, trust is a system for property management widely practiced in the Common Law countries. Its basic structure is that the settlor transfers the rights of trust property to the trustee who, in the light of the purpose of the trust, manages or disposes of the trust property for the benefit of the beneficiary. In Common Law, the trustee is the nominal owner of the trust property, and the beneficiary is the real owner who is entitled to the benefit from the trust property. In other words, the trustee is the owner in Common Law, however, the beneficiary is the owner in Equity Law. This is the "Dual Ownership" theory on the basis of which the Anglo-American trust system has been established.The "Dual Ownership" theory is hard to understand for the Civil Law countries with the property right theory in the traditional civil law when they try to accept the trust system, for the legal relations in trust are hardly describable by "one thing, one right" principle. Then how to handle the conflict so that the trust theory can be of service to the Civil Law system? One technical approach is to establish the principle of the independent character of trust property. The independent character of trust property, in short, is that the trust property is separate from the trustee's own property, and "once created, the trust property becomes self-closed and cut-off from the outside world". So, as the trust property is not the trustee's own property, it is not the trustee's legacy or his/her property for liquidation in his/her bankruptcy, and the creditors of the trustee can not claim for payment with the trust property, and so on. The central point in the principle lies in the fact that, with the peremptory stipulations of the Trust Law, the Civil Law countries have broken the contact between the trust system and the traditional civil law system in some aspects so that the trust has become one part of the civil law in the Civil Law system within the scope designated by the peremptory stipulations in the civil law.The trust legislation in the Civil Law countries is based on the principle of the independent character of trust property and with which as the starting point the rights and obligations of both the trustee and the beneficiaries have been established. Since the trust property is not the trustee's own property, he shall be under a duty to manage the trust property, set up accounts for the trust, provide the trustee with relevant information and pay interest from the trust property to the trustee. And correspondingly, the beneficiaries are entitled to the benefit from the trust property. These rights and obligations logically result from the "independent character" principle. And they not only have guaranteed the rights and interests of the beneficiaries, but also have reflected the nominal ownership of the trustee to the trust property, and what is more important is that they are on the whole identical with the rights and obligations of the trust parties concerned in the Common Law, which has reflected the essence of the trust and represents the wisdom in advancing the "independent character" principle.Advancing of the "independent character" principle has, on the one hand, solved the difficulty of introducing the trust system by the Civil Law countries, and on the other hand, helped bridged over the gap in the understanding of the trust system by the two large law systems. In Hague Conventions, the trust property is defined as the independent funds, which is the application of the "independent character" principle in the international conventions. In a sense, the "independent character" principle has become the international practice for the trust system generally recognized by the countries with either Common Law system or Civil Law system.Undoubtedly, the "independent character" principle is in favor of the protection of the beneficiaries, however, since the trust property is "self-closed", does it show red light to the protection of the...