Trusts: From Medieval Crusaders To Your Family’s Future

Trusts are often brought up in inheritance planning, for good reason, they can be really useful but it struck me that most people wouldn’t have even a passing idea of what one actually is and the reasons they could be useful. I’m no legal expert, but I have a law degree, a financial advising qualification and an obsession with how the whimsy of history meets the every day.

1066 and All That

So, where to begin?!

Probably around 1066 when the British legal system starts taking shape in the way that we might recognise today. William the Bastard (or Conqueror if you’re that way inclined) was obsessed with standardising everything so that he could keep a strong hand on his conquered lands - especially, I suspect, those heathens in the north. (There was just a fabulous episode about the harrying of the north on Gone Medieval). 

So the Common Law develops - which is really a wonder, and as a result of both its efficiency and no doubt our later, shameless colonisation, it is probably the most influential legal system in the world. The idea is that people should know the law so they know how to behave - decisions should be rational, based on precedent and publicised. A system of itinerant judges were sent out in circuits around the country to hear cases and apply the standardised law (we still have circuit judges today!). 

The only way to bring a case to the court was to buy a writ - which was a permission to bring a case - and to get a writ the facts of your case had to match predefined categories. The only remedy available in these courts was the payment of damages. There were church courts too, to try members of the clergy and also moral crimes like adultery and drunkenness. 

Bringing Equity into the Legal System

You can see that, within those strict parameters quite a lot of injustice was totally ignored. If you couldn’t afford the writ, if your case didn’t fit into the specified categories or if you didn’t want money but instead for the contract to be carried out - well you were straight out of luck. 

So people started appealing directly to the King, who was naturally, ‘the fountain of all justice’ and who importantly wasn’t bound by the strict rules of the courts. Over time the Chancellor took responsibility for this and the law of Equity developed, dealt with in the Chancery Court.

The Chancellor was the King’s Chaplain and thus the ‘Keeper of his conscience’ so the cases dealt with what was right and proper, according to the whims of whoever was deciding at the time (with each Chancellor’s decisions described as being as different as the size of their feet). A system of precedence developed within Equity though, so it too became more standardised. Significantly, there were many more remedies available - for example ordering the performance of a contract or granting injunctions.

If you thought the Common Law Courts were happy about this upstart development, well, they weren’t… but an uneasy truce also developed as long as everybody stayed in their lanes and eventually, in the middle of Queen Vic’s reign, the courts amalgamated.

The Current State of Equity Law

Today, the principles and remedies of Equity developed in the Court of Chancery, are simply applied through the normal courts - we wouldn’t know the difference (unless you had to study Trust Law in every year of your law degree…).

Trusts developed in around the 13th century out of what were called Uses, and are very specific to the law of Equity. 

Imagine being a crusader, off to far-away places to kill a load of humans because they don’t think like you do or believe the same things, and you’re wondering how to protect your wife and young children (or fully grown daughters if you haven’t managed to marry them off yet). In reality many of them transferred the ownership of their lands to other actually legally recognised people - men - but for the benefit of their wives and children (i.e. they receive the rents and what the land produced etc).

In the Common Law Courts, only the legal ownership would be recognised, which means that if our crusader’s mate decided that he just wanted the land, well, it was his. It was the Court of Equity which recognised the beneficial ownership that the wife and children had in the property and thus Trust Law developed.

So That’s the Medieval Backstory

But what about how Trusts work in practice today, and why they still matter in estate planning?

That’s what I’ll cover in part two which will only be available to my newsletter subscribers. You can sign up right here for weekly financial thoughts and three actionable items to make sure your money is following your values.

Love Eleanor. xxx