3.

Define the following terms :

 Private and Public trust

 Family Trust & Commercial Trust
 Islamic Trust & Malaysian Trust

Private trust - An express trust is created when the settlor expresses an intention either orally
or in writing to establish the trust and complies with the required formalities. An express trust
is what people usually mean when they refer to a trust. Every private trust consists of four
distinct elements: an intention of the settlor to create the trust, a res or subject matter, a
trustee, and a beneficiary. Unless these elements are present, a court cannot enforce an
arrangement as a trust.

Public trust – a trust created for charitable or religious or educational or scientific purposes. /
Public trust is the degree to which the public believes that the profession and the professional
will act in a particular way that serves and protects the public’s interest. The most common
public trusts are charitable trusts, whose holdings are intended to support religious
organizations, to enhance education, or to relieve the effects of poverty and other
misfortunes.

Family trust – The term family trust refers to a discretionary trust set up to hold a family's
assets or to conduct a family business. Generally, they are established for asset protection or
tax purposes. It can be used to manage estate taxes, shelter assets from creditors and pass on
wealth to future generations. A family trust is a specific type of trust families can use to
create a financial legacy for years to come.

Commercial trust – Commercial trust is a form of business organization which is similar to a

corporation, in which investors receive transferable certificates of beneficial interest. The
trustees will administer it for the advantage of its beneficiaries who hold equitable title to it.
They administer the trust based on the terms set forth in the declaration of trust. The
beneficiaries receive certificates of beneficial interest as evidence of their interest in the trust,
which is freely transferable. Profits and losses resulting from the use and investment of the
trust property are shared proportionally by the beneficiaries according to their interests in the
trusts.

Commercial trusts can be divided into three broad categories :

 trusts for investment purposes
 trusts acting as a security device
 trusts which carry on a business or trade

Islamic trust – A trust in Islamic law is known as “Waqf”. Literally, “Waqf ” means to stop,
contain or to preserve and is a voluntary, permanent, irrevocable dedication of one’s wealth
to Allah. According to some Islamic scholars, for a Waqf to be valid, it should be settled for a
“pious purpose” (“Ala birr”). A “pious purpose” has been defined as anything that is good
and pleases Allah and this would include charity. Under Islamic law, providing for one’s
family is an act of charity which means that a Waqf for family members (a “Waqf Ahli”) is
permitted. Taking financial help from others is not recommended in Islam so a Waqf Ahli
endeavours to prevent the descendants from becoming needy of others, thus eliminating
poverty and need at root. It is also possible to have a charitable form of Waqf known as
“Waqf Khayri” which benefits avenues of public welfare and particular segments of society.

Malaysian trust –