Trusts are not inherently problematic. Most are established for legitimate reasons such as protecting family assets, providing for vulnerable beneficiaries, succession planning, or supporting charitable purposes. However, the same legal features that make trusts useful can also make them vulnerable to abuse.
The public interest issue is not the existence of trusts, but transparency, accountability, and oversight. When trusts are used to conceal beneficial ownership, avoid scrutiny of decision-makers, hide conflicts of interest, frustrate creditors, or shield individuals from legitimate accountability, they undermine public confidence in institutions.
New Zealand has seen repeated debates about whether trusts provide too much secrecy, particularly where public officials, politicians, regulators, or those exercising significant influence are involved. Questions about disclosure are especially important when trust arrangements intersect with public decision-making.
History shows that opaque trust structures have occasionally featured in cases involving fraud, tax evasion, asset concealment, and breaches of fiduciary duty. That does not mean all trusts are suspect, but it does mean robust governance, independent oversight, and transparency are essential.
The key question should always be: who benefits, who controls the assets, who makes the decisions, and is that information available to those who have a legitimate interest in knowing?
And further should there be a searchable registry of trusts with basic information available to the public as a first line of defense against fraud and misuse of trusts. At the very least trustees should clearly state when they hold the ownership of assets of a trust, making it clear they do not own then outright but for the benefit of others.
I would love to know more about the 'no wills' problem. I can see that this would apply to land held through a feudal relationship, but would it apply to movables too and would it apply to TOWNS???? Given that medieval historians used to rely so heavily on wills for evidence about lots of different things (eg religious faith/personal beliefs) it seems unlikely that it was just people who set up trusts who were writing wills, no? What a fascinating article ....rather testing my very faded memories of undergraduate medieval history. It was an amazing period, and medieval historians, including Maitland, are awe-inspiring.
You eventually get to Jarndyce, but haven’t you considered that Chancery was, in its own way, also an unreformable institution? They had speeches in Parliament against it, campaigns, inquiries, commissions, piecemeal reforms one after another from the late 18th c on. The institution was widely hated and clearly totally dysfunctional for nearly a century before they finally did the reforms of the 1860s. There was no way to circumvent it. People just avoided going to law if they didn’t have hundred of pounds and 8-10 years to lose.
The parable works the other way as well — institutions can stay broken for a long time and get fixed decades or centuries late.
Edit: Or, to put it another way: if you ask yourself what young Works in Progress readers would have been Substacking about in the 1820s — the answer is almost certainly Reform (or even abolition) of Chancery. Lord Eldon was the Tony Juniper of his day. The usefulness of Chancery’s innovations obviously made the dysfunction of its processes correspondingly toxic.
The question of why it became so maladaptive is worth thinking through. At a deep level, the turn to exhaustive procedure and insanely pedantic precedent sorting must have something to do with the desacralisation of its original mandate (i.e. the divine right of Kings) after the Civil War. For this reason I’m quite sceptical that you can base a theory of institutional change on something like this — it was able to be above the law because it represented the force majeure of a medieval King’s conscience. I think we would find a closer parallel in mafia behaviour today than we would in cuddly neighbourhood associations.
I think there is a very interesting parallel between equity and the planning system. The original TCPA 1947 system was purely discretionary, much as equity varied with the Chancellor’s foot. In 1990 we added the rule that planning applications would be decided in accordance with the local plan unless material considerations indicate otherwise; in 2008 we introduced NPSs to make infrastructure approvals more predictable. Much as Lord Eldon sought to make Chancery more predictable, and other 19C reforms tried to make it less inefficient by adding Vice-Chancellors and shortening pleadings.
But it failed, because this procedural tinkering didn’t change the incentives. The officers of the court were remunerated for fees levied on documents stamped, and in a Jarndyce case the parties’ costs are paid out of the estate. The only thing that actually helped was fusion in 1875, followed by the Woolf Reforms in 1998.
There’s a debate about whether the planning system should or shouldn’t be discretionary. I don’t think that’s particularly helpful; ultimately, you can't really have a non-discretionary way of approving big infrastructure projects. (Conversely, we subject house extensions to a discretionary system.) Equity remains discretionary constrained by rules, just as planning has become constrainedly discretionary. If we take the equity analogy the problem is not with the substantive system, nor the procedural rules, but rather the incentives for parties to use those rules.
Trusts are not inherently problematic. Most are established for legitimate reasons such as protecting family assets, providing for vulnerable beneficiaries, succession planning, or supporting charitable purposes. However, the same legal features that make trusts useful can also make them vulnerable to abuse.
The public interest issue is not the existence of trusts, but transparency, accountability, and oversight. When trusts are used to conceal beneficial ownership, avoid scrutiny of decision-makers, hide conflicts of interest, frustrate creditors, or shield individuals from legitimate accountability, they undermine public confidence in institutions.
New Zealand has seen repeated debates about whether trusts provide too much secrecy, particularly where public officials, politicians, regulators, or those exercising significant influence are involved. Questions about disclosure are especially important when trust arrangements intersect with public decision-making.
History shows that opaque trust structures have occasionally featured in cases involving fraud, tax evasion, asset concealment, and breaches of fiduciary duty. That does not mean all trusts are suspect, but it does mean robust governance, independent oversight, and transparency are essential.
The key question should always be: who benefits, who controls the assets, who makes the decisions, and is that information available to those who have a legitimate interest in knowing?
And further should there be a searchable registry of trusts with basic information available to the public as a first line of defense against fraud and misuse of trusts. At the very least trustees should clearly state when they hold the ownership of assets of a trust, making it clear they do not own then outright but for the benefit of others.
Such an interesting read, thank you
I would love to know more about the 'no wills' problem. I can see that this would apply to land held through a feudal relationship, but would it apply to movables too and would it apply to TOWNS???? Given that medieval historians used to rely so heavily on wills for evidence about lots of different things (eg religious faith/personal beliefs) it seems unlikely that it was just people who set up trusts who were writing wills, no? What a fascinating article ....rather testing my very faded memories of undergraduate medieval history. It was an amazing period, and medieval historians, including Maitland, are awe-inspiring.
You eventually get to Jarndyce, but haven’t you considered that Chancery was, in its own way, also an unreformable institution? They had speeches in Parliament against it, campaigns, inquiries, commissions, piecemeal reforms one after another from the late 18th c on. The institution was widely hated and clearly totally dysfunctional for nearly a century before they finally did the reforms of the 1860s. There was no way to circumvent it. People just avoided going to law if they didn’t have hundred of pounds and 8-10 years to lose.
The parable works the other way as well — institutions can stay broken for a long time and get fixed decades or centuries late.
Edit: Or, to put it another way: if you ask yourself what young Works in Progress readers would have been Substacking about in the 1820s — the answer is almost certainly Reform (or even abolition) of Chancery. Lord Eldon was the Tony Juniper of his day. The usefulness of Chancery’s innovations obviously made the dysfunction of its processes correspondingly toxic.
The question of why it became so maladaptive is worth thinking through. At a deep level, the turn to exhaustive procedure and insanely pedantic precedent sorting must have something to do with the desacralisation of its original mandate (i.e. the divine right of Kings) after the Civil War. For this reason I’m quite sceptical that you can base a theory of institutional change on something like this — it was able to be above the law because it represented the force majeure of a medieval King’s conscience. I think we would find a closer parallel in mafia behaviour today than we would in cuddly neighbourhood associations.
I think there is a very interesting parallel between equity and the planning system. The original TCPA 1947 system was purely discretionary, much as equity varied with the Chancellor’s foot. In 1990 we added the rule that planning applications would be decided in accordance with the local plan unless material considerations indicate otherwise; in 2008 we introduced NPSs to make infrastructure approvals more predictable. Much as Lord Eldon sought to make Chancery more predictable, and other 19C reforms tried to make it less inefficient by adding Vice-Chancellors and shortening pleadings.
But it failed, because this procedural tinkering didn’t change the incentives. The officers of the court were remunerated for fees levied on documents stamped, and in a Jarndyce case the parties’ costs are paid out of the estate. The only thing that actually helped was fusion in 1875, followed by the Woolf Reforms in 1998.
There’s a debate about whether the planning system should or shouldn’t be discretionary. I don’t think that’s particularly helpful; ultimately, you can't really have a non-discretionary way of approving big infrastructure projects. (Conversely, we subject house extensions to a discretionary system.) Equity remains discretionary constrained by rules, just as planning has become constrainedly discretionary. If we take the equity analogy the problem is not with the substantive system, nor the procedural rules, but rather the incentives for parties to use those rules.