Trusts can take a variety of different forms, depending upon the jurisdiction in which the trustees are sited, the laws of the jurisdiction under which they are drafted and the purpose for which they’re created. In many respects the limitation placed upon a trust is by the skill and ambition of its architect.
While the concepts of a trust date back to Roman times, Trust law first developed in 12th century England to protect the interests of Crusaders and is therefore a very well-established part of the legal system in common law jurisdictions.
Trusts have a multitude of different uses and applications depending upon the circumstances. Although their original purpose dating back to the Crusades, holding assets for the benefit of others, remains a widespread praxis. The financial sector has derived many of its offerings from trusts and derivatives thereof to provide pensions and investment products.
Unit trusts have developed over time as a mechanism for multiple investors in them to participate in an overarching trust structure divided into separate interests. With the first Unit Trust having been seeded in the UK in 1931 they are a well-established vehicle. It is common for unit trusts to have more than one type of unit – income units and accumulation units – having different rights and benefits attaching to them. In this example, income units pay returns generated by the unit trust back to the unitholder whereas the investment return attributed to accumulation units is retained by the unit trust and reinvested for additional growth and compounding.
