Article on The Sub-Trust in Scots Law
The paradigmatic trust involves three parties: a settlor (who transfers property to another) a trustee (who holds the property in trust) and a beneficiary (for whom the trust property is administered and who ultimately receives the benefit of that property). The law of trusts allows a number of variations on this theme, of which the ‘sub-trust’ is one. In a sub-trust, the beneficiary declares a trust over his or her trust interest and so becomes a ‘sub-trustee’ in a chain of relationships of management and entitlement. The sub-trust occurs relatively often in commercial practice but has been the subject of little detailed study, particularly in Scots law.
This paper considers the idea of the sub-trust within the broader framework of the Scottish law of trusts. Beginning with an introduction to the concept, the paper discusses how it might be accommodated with reference to the predominant model of the trust in Scotland. Having established a possible conceptual basis for the sub-trust, the paper anticipates four difficulties which arise in its operation. Possible solutions are suggested in each case: account is taken in particular of the experience of English law where more frequent use has given rise to a larger body of rules dealing with sub-trusts. The paper demonstrates not only that sub-trusts can be satisfactorily accommodated in Scots law, but that they represent a fruitful area of study in Scotland and further afield.