I have been sitting in for lectures at
law school for this semester, even though I am officially on medical leave of
absence still for the semester. The modules which I have been sitting in so far
are the year 2 core modules like public law, and equity and trust; modules
which I did not take the exam for as I exempted myself in the middle of the semester
last year. I just sat in for a family law lecture today as well which is an
elective as it was coincidentally after the public law lecture in the morning. It
was the second lecture for the semester and the class was going through the
topic of domicile and the conflict of law in governing marriage status and
divorces. Truth be told, I do enjoy sitting in for lectures and simply listening
to whatever is being taught without having the pressure on me to study the
subject in a exam-competitive manner. The cohort people are those of the
following year, few of whom I recognize from the varsity Christian fellowship.
The majority are unfamiliar to me.
So we were just going through a lecture
on equity and trust, over the really basic concepts on defining a trust. For
the unacquainted, a trust is a legal concept in law whereby certain proprietary
objects like money or houses are held by a group of people called trustees
appointed by a class of people called the settlers for a class of people called
the beneficiaries. A common example of a trust in action is the will that is
drawn up by a person to pass his estate over to his descendents as inheritance.
I felt that the lecturer who was
teaching the subject was much clearer than the lecturer I had when I sat in for
the class last year. He explains the basic concept whereas I feel that the
previous lecturer I had came into the class expecting that every student had
already read the materials and understood it and thus spoke in terms that rides
roughshod over the basic principles. But to each student his preference. I have
heard of other students saying that they learn much more from the other
lecturer.
If there was any module which appears
most unfamiliar to me when I first encountered it, it is equity and trust. I
wasn’t able to determine simply based on the name of the module itself what the
purpose of that area of law was about. But I don’t think that I should think
myself as an exception in my puzzlement. After all, the trust concept is one
that is only prevalent amongst common law countries like the UK, whilst civil
law countries like France have only recently begun to adopt trust concepts,
albeit in a ameliorated form of the conventional contractual arrangement. Why
are these civil law countries so suspicious of adopting the trust concept? As I
hear from my lecturer today, it is because of the complexities that the trust
concept engender for the tax system. I am not exactly too sure how this is
done, but the trust system can be used to circumvent taxation and other
proprietary acquisition mechanisms such as requisition by creditors for
bankruptcy. The lecturer was telling an anecdote where at an international
conference convened with the purpose of increasing recognition of the trust
concept, the British representative was asking the French representative why
France was so leery of the trust concept in its legal system. The French
representative curtly replied, “How many books do you guys have on tax law?”
Indeed, common law jurisdictions spot voluminous tomes on tax law that can take
up multiple shelves on a law library. This is so because there needs to be many
exceptions to the operation of the trust system so as to prevent people from
avoiding taxes. The French seeks to avoid complicating their taxation law in
such a manner.
There are many functions apart from
intestacy and wills which the trust system helps to administrate. Others, like
setting up of welfare funds for employees, or the setting up of charities, also
relies on the concept of the trust system for resources pooled to be used in a
manner directed towards the objectives of the trust and be capable of being
supervised by the legal system. A question that I have on my mind that I haven’t
yet explored is how a trust concept in the legal system is superior to the
contract concept is administrating such transfer of property. Perhaps it isn’t,
or at least some people don’t think it is, which is why the trust concept is
not prevalent in all jurisdictions.
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