On the Historical Development and Contemporary Value of Family Trust

On the Historical Development and Contemporary Value of Family Trust






Family trust which stemmed from Use is the earliest form of trust.Originally,Use was a way of disposing of family land,in which sense that Use was designed and applied.Religion played a significant role in the popularization of Use.In the structure of Use,the relationship between the trustor, trustee and beneficiary was interactive,which constituted the essential elements of Use.The common law only admitted the legal effect of land transfer between the trustor and trustee in the early stage of Use. Nevertheless,the usufruct relations between the trustee and beneficiary were still adj usted in the scope of morals.After the rise of equity,the court of chancery gradually defined the relationship between the trustee and beneficiary as a kind of legal relationship.Thus the beneficial right of trustee was recognized by law.Later on,the validity of?use on use?was confirmed by j udicial precedent.As a result,family trust came into being. The family trust was mainly used for the settlement of family property in the early days.In today's society,its value is reflected in the inheritance of family wealth and family business.As far as wealth inheritance is concerned,the risk isolation function of trust makes trust property separate from other property of the trustor and trustee,thereby avoiding the hotchpot.Some unfavorable factors would not affect the independent existence of trust property,such as the trustor's death,marriage and family changes.Hence,family trust makes the trust property under the steady control of trustee,which forms the foundation for the inheritance of family wealth.The continuation of family firm is the basic form of inheritance of family business.Nevertheless, there are considerable risks in the inheritance of family firm.In the model of family trust,although the equity may be reassigned,the family firm won't be broken up,and won't fluctuate greatly because of family changes,which ensures the integrity and stability of profitability and anti-risk ability. A tide of family inheritance will appear in the next 5 to 1 0 years in China.It is a problem how to achieve the inheritance of family wealth and family business.Family trust can provide a sound solution for us.In fact,the family trust,as a classic mode of inheritance of family wealth and family business,is very popular among the rich in European and American developed countries.There are quite a few entrepreneurs from mainland China who have established their family trusts overseas. It is the original and basic function of family trust to manage land,which can be used by trust companies to run farmers' land in our country.It is called family land trust.As a trustee,the trust company which acquires farmers'transfer of contractual operation right of rural land should manage the land on behalf of the farmers themselves and their family members. It would help the trust companies expand their business,which will bring profit growth in future.At the same time,the farmers can obtain the stable income from their land.Furthermore,the family land trust is of help to promote the circulation,intensive management and large-scale operation of rural land.


Guanghua Law School, Zhejiang University, Hangzhou 310008, China

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