Trust Law as Fiduciary Governance Plus Asset Partitioning

Abstract

The theme of this essay, a commentary on two papers forthcoming in the same volume on “The Worlds of the Trust,” is that trust law is not a species of property law or contract law, but rather is a species of organizational law. Organizational law supplies a set of contractarian rules, some of a fiduciary character, that provide for the governance of the organization. These are the rules that provide for the powers and duties of the managers and the rights of the beneficial owners. Organizational law also supplies a set of proprietary rules that provide for asset partitioning. These are the rules that provide for the separation of the property of the organization from the property of the organization’s managers, beneficial owners, and other insiders. Classifying trust law as organizational law removes the tension between the contractarian governance and the proprietary asset partitioning features of trust law.

JEL Classification: K11, K29