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Trusts True or Bare

Trusts True or Bare The answer to this rhetorical question is not something that is immediately apparent in the majority of cases, the intent of the settlor being the determining, if not only, factor. The determination of whether a trust is being used as a cloak for fraud or abuse, or is a sham, will be aided by reference to the doctrine of substance over form. Where a trust has but the appearance of legal effectiveness and where the settlor either reserves the power to direct the trustee, or where such power is conferred upon the beneficiaries, such that the settlement is not intended to have any legal effect, the trust may be described as a bare trust. The essential characteristics of a bare trust are that either the settlor or the beneficiary has real, dispositive control over capital and interest such that the whole of the equitable ownership of the trust property remains in the settlor, notwithstanding the existence of a trust instrument designating a trustee and beneficiary. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Crime Emerald Publishing

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1359-0790
DOI
10.1108/eb025966
Publisher site
See Article on Publisher Site

Abstract

The answer to this rhetorical question is not something that is immediately apparent in the majority of cases, the intent of the settlor being the determining, if not only, factor. The determination of whether a trust is being used as a cloak for fraud or abuse, or is a sham, will be aided by reference to the doctrine of substance over form. Where a trust has but the appearance of legal effectiveness and where the settlor either reserves the power to direct the trustee, or where such power is conferred upon the beneficiaries, such that the settlement is not intended to have any legal effect, the trust may be described as a bare trust. The essential characteristics of a bare trust are that either the settlor or the beneficiary has real, dispositive control over capital and interest such that the whole of the equitable ownership of the trust property remains in the settlor, notwithstanding the existence of a trust instrument designating a trustee and beneficiary.

Journal

Journal of Financial CrimeEmerald Publishing

Published: Mar 1, 2000

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