English trust law concerns the protection of assets, usually when they are held by one party for another's benefit. Trusts were a creation of the English law of property and obligations, and share a subsequent history with countries across the Commonwealth and the United States. Trusts developed when claimants in property disputes were dissatisfied with the common law courts and petitioned the King for a just and equitable result. On the King's behalf, the Lord Chancellor developed a parallel justice system in the Court of Chancery, commonly referred as equity. Historically, trusts have mostly been used where people have left money in a will, or created family settlements, charities, or some types of business venture. After the Judicature Act 1873, England's courts of equity and common law were merged, and equitable principles took precedence. Today, trusts play an important role in financial investment, especially in unit trusts and in pension trusts. Although people are generally free to set the terms of trusts in any way they like, there is a growing body of legislation to protect beneficiaries or regulate the trust relationship, including the Trustee Act 1925, Trustee Investments Act 1961, Recognition of Trusts Act 1987, Financial Services and Markets Act 2000, Trustee Act 2000, Pensions Act 1995, Pensions Act 2004 and Charities Act 2011.
Trusts and fiduciary duties matter when property is managed by one person for another's benefit. Most trust money, which is invested by financial institutions around the City's Royal Exchange, comes from people saving for retirement. In 2011, UK pension funds held over £1 trillion of assets, and unit trusts held £583.8 billion.
The Star Chamber (est. circa 1398) played the role of a criminal court of "equity", where judges on the king's authority could impose punishments that deviated from the law. It was abolished by the Habeas Corpus Act 1640, although in civil matters the Court of Chancery continued operation until 1875.
In his book Bleak House (1853), Charles Dickens pilloried the Court of Chancery's arcane and tedious practices, exemplified in his fictional case of Jarndyce v Jarndyce. Within two decades, Parliament abolished the court, and merged equity with the common law through the Supreme Court of Judicature Act 1873, and its successor Judicature Acts.
Trust law plays a major role in protecting people's occupational pensions, in investments like unit trusts, and in determining "equitable" ownership when people buy, and live together in, a home.
