The principal of trust law is ancient.  Although the Romans used a form of trust for ownership, our modern trust law traces back to England in the Middle Ages.  At that time lands would be placed into the name of a trusted individual to hold  until some later time.  This was done often done to avoid military service or to avoid paying taxes:  two things that the King did not appreciate.  In other cases, the owner of property went off to fight foreign battles for the King and left his property with someone to look after it. Unfortunately, a disturbing problem cropped up when the trusted holders of property refused to give back properties to their rightful owners.  Judges in the English courts of law refused to do anything because ownership of the property in question was legally held by the trusted person. The person holding the land had, in other words, “legal title.”  In response, the real owner petitioned the King’s courts which, out of fairness (equity) forced the legal owner to return the property to its “true owner”  (now called the beneficial owner).    The King’s court became known as a Court of Equity, and land title granted by these courts are known as “equitable title.” 

Five hundred years later, and after millions of lawyer and court hours, trust law has become a sophisticated and complex area of law.  Our founding fathers vested both the powers of law courts, and the King’s equity courts in our judicial system.  So the concepts and rules are still with us, but we no longer have to separately petition a King for “equitable relief.”   Modern courts hearing a case in law follow one set of rules,(including money damages and jury trials) and a different set of rules when hearing cases in equity (no juries, but the ability to force or restrain actions, such as with “restraining orders”).

In general, trust law is based on the simple idea that ownership of property is really a bundle of rights; rights which can be separated and vested in different persons.  This means that the legal owner of record may not be the true owner, and the true owner may not be the person with the right to control and enjoy the property held in trust.  In the United States, we are free to privately make contracts for lawful purposes that separate the various rights and powers inherent in property ownership.

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