Equity, in its broadest sense, equates to fairness; as a legal system, equity refers to as a body of law which addresses concerns that fall beyond the jurisdiction of the common law system. The English justice system developed during the 17th to 19th centuries operated as a distinct entity from the common law system, and was not bound by previous legal precedents. Instead, the Lord Chancellor had the authority to overrule law made by judges and barristers if he had cause to believe it was equitable to do so. As a result, equity came to operate as more of a system of principles and legal guidelines than affirmed rules — however, due to the judicial verdict often being a matter of conscience, the rules of equity were consolidated into a similar system of precedents, as in common law, from the 17th century onward.
Within common law legal systems, a trust refers to a legal entity created by one party (the trustor) through which a second party (the trustee), holds the right to manage the trustor’s assets or property on behalf of a third party (the beneficiary). Any trustor who plans to place their property into trust must turn over part of their bundle of rights to their chosen trustee, ensuring the property’s legal ownership becomes separate from control of its equitable ownership. This can be done for tax purposes, or to manage a property or estate – as well as its benefits – if the initial property holder dies or becomes otherwise absent or incapacitated. For this reason, trusts are commonly established in wills, in order to establish how money, property, and assets will be meted out for the deceased’s beneficiaries.
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