Article: Enforcement

The importance of enforcement to a trust is an inadequately examined issue: must beneficiary enforcement be realistic or does notional enforceability suffice? If a settlor entrusts property to a trustee and no beneficiary is realistically able to enforce it, does he create a trust? This variation of the famous philosophical thought experiment regarding observation and perception is unfortunately far from theoretical as modern trusts, perhaps epitomised by the massively discretionary trust, set up numerous obstacles to enforcement. First, there are informational barriers to enforcement: if no beneficiaries are aware of their beneficial interests, can enforcement follow? Secondly, modern trusts increasingly employ exemption clauses, ouster clauses and even no contest clauses to deter beneficiaries from challenging trustee decisions. How far can trust law accommodate settlor autonomy before it endangers the institution itself by rendering enforcement notional yet impractical? Furthermore, many jurisdictions have either introduced or are contemplating introducing non-charitable purpose trusts that do away with beneficiaries altogether. Alternative enforcement mechanisms are proposed in place of beneficiaries. But are these enforcement mechanisms realistic substitutes or do they again only cast a mirage of accountability?