Trust, an arrangement by which property is handed to or vested in a person, in the trust or confidence that he will use and dispose of it for the benefit of another. At Rome such an arrangement was called a Fidei-commissum (q. v.), and at first the honour of the trustee was the only security for the performance of his duty; Augustus gave legal validity to trusts, and appointed a special prætor to enforce them. In England land was in early times frequently conveyed to persons in whom the owner had confidence, that they might hold it to the use of other persons indicated by him. The courts of law looked only to the legal title, and took no notice of the uses to which the land was held; but the Chancellor would compel a 'feoffee to uses' to do his duty. The use was turned into a legal estate by statute in 1536, but the equitable powers of the Chancery remained, and were freely used to enforce any trust, whether relating to land or to personal property. Trusts of land must be declared in writing, but this rule does not apply to trusts raised by implication or construction of law. Thus, if A purchases land with the money of B, he holds it as trustee for B, although there may be no written agreement between them. The person who holds property in trust is a trustee; the person for whose benefit he holds is called cestui que trust (he that has the benefit of the trust). In declaring a trust no particular words are necessary, but the intention of the party making it must be clear. Thus, in wills, a testator sometimes uses words which do not amount to an express trust, but speaks of his 'wish and desire,' or his 'confidence,' that the executor or trustee shall do certain things. These are called in the law precatory trusts; they are enforced if no uncertainty exists as to the purposes or mode of carrying out the trust. But if a testator merely recommends an executor to 'consider certain persons,' 'to be kind to them,' or 'to do justice to them,' or 'to make ample provision for them,' &c., such expressions are treated as too vague to be binding, and therefore the executor may disregard them, or use his own discretion. A trustee's is not a compulsory office, but gratuitous, and therefore he need not accept the office unless he pleases. But if he once accept he is not at liberty afterwards to renounce, unless the trust-deed contain a provision enabling him to do so, or the court for good reasons discharge him. A trustee cannot delegate the office to a third person, but continues personally bound to do his duty. Where there are several trustees appointed the office is considered joint, so that if one dies the survivors continue to exercise the office. As a general rule, all must join in doing any act; but if the trust is of a public nature a majority may bind the minority. Each trustee is liable only for his own acts or defaults, and this is so even though, for form's sake, he join his co-trustees in signing a receipt, if he can show that he never received the money in point of fact. Nevertheless when money lies in the hands of one trustee the others ought not to be satisfied with his mere statement that the money has been invested by him, but should see that it is actually done. Another rule is that a trustee is not allowed to make a gain of his office; and so jealous is an English court of this rule that trustees have sometimes been restrained by the court from shooting over the trust estate. A trustee is personally liable if he trade with the trust funds, or buy shares in a joint-stock bank; for, even though the trust-deed authorise this to be done, he will be liable to pay the debts of the trading concern, though far exceeding the amount of the trust funds. So, if a trustee is a solicitor, and does legal business for the estate, he will not be allowed to charge for his care and trouble, but at most will be allowed only the costs out of pocket. It is seldom, therefore, that a trustee can get any benefit to himself from the trust estate. Formerly if cestui que trust died without heirs land held in trust belonged to the trustee, but the rule has been altered by statute, and the escheat is now to the crown. It is the duty of a trustee to keep the trust funds safe; and if they consist of moneys, then he ought to invest them in government stock, and not let the money lie unproductive. He is not entitled to lend the money on personal security, or in the shares of any private company; but he may invest in mortgages, unless he is forbidden by the deed or will. If there is, therefore, no power to invest in mortgages, the trustee must invest in consols or in some other security authorised by the orders of the Supreme Court. The trustees, as a general rule, must pay interest whether they invest the funds or not (if they have had time to invest) to the cestui que trust; and they must account for all the profits they make with the trust funds, whether rightly or wrongfully. If a trustee has grossly misconducted himself as to the trust funds he will be charged 5 per cent. interest, and sometimes compound interest. A trustee is entitled to be indemnified for all the reasonable expenses or outlay attending the execution of the trust, but he must in general bear the loss of any mistake as to the law; but if there is any peculiar difficulty in carrying out the trust, he is entitled to take the opinion of, or even to throw the chief management upon, the Chancery Division of the High Court, as the only safe protection. When trustees are guilty of gross negligence, mismanagement, or misconduct the Court will remove them and appoint others (see Lewin on Trusts). By Act of 1867 Scottish trustees were limited to investment in Scottish heritable security, government stocks, public funds, and Bank of England stock. The Act of 1884 extended the choice, adding securities the interest of which is guaranteed by parliament, debenture stock, and some kinds of preference or guaranteed stock of certain British railways, stock or annuities issued by British municipal corporations if properly secured, certain East Indian and colonial stocks, and feu-duties. In Scotland, as in England, trustees holding shares of a joint-stock bank as part of the trust funds are liable personally to pay the debts of the bank.
A trust is also, especially in America, an arrangement for the control of several companies under one direction, to cheapen expenses, regulate production, and beat down competition. Trusts have provoked keen feeling and have been the subject of much discussion; the difficulties in the way of legislation are sufficiently obvious, apart from the vast influence of the trusts.
See SYNDICATE; Lloyd, Wealth against Commonwealth (1894); Von Halle, Trusts in the United States (1895); J. W. Jenks, The Trust Problem (1900).