May '25 • General discussion
Private trusts according to chatGPT
Just interrogated AI about private trusts… each approach I took it said I’d still need to register it… can Dimebar or pete explain how our equity law private trusts avoid the statutory demand for registration? It’s kind of knocked me sideways. It seems to contradict ‘equity trumps statute law’.
# **Key Legal Reality: Equity and Statute Are Not Separate in Practice**
While your **trust may be expressed under equity**, it still operates **within the UK's legal framework**, which includes:
1. **Common law and equitable principles**, and
2. **Statutory obligations**, including modern legislation like:
- The **Trust Registration Regulations** under **Money Laundering laws**, and
- The **Finance Acts** (governing tax compliance)
Under **UK jurisprudence**, **statute overrides equity** where they conflict. Courts apply equity **subject to statute**, not outside or above it.
---
### So: Can You Decline to Register a Trust Because It's "Outside Statute Law"?
**Not successfully, no.** Here's why:
- **HMRC and UK courts will not recognise the trust as exempt** from registration merely because it’s "expressed under equity" or “private.”
- **If the trust meets the criteria** (UK asset, UK trustee, UK business relationship, or tax exposure), it **must be registered**, or it will be treated as **non-compliant**.
- Failure to register can result in:
- **Fines or penalties**
- **Inability to open bank accounts or engage professionals**
- **Legal invalidation of the trust in certain contexts**
---
### Common Misconception:
There is a belief in some circles that trusts (or individuals) can operate entirely in the “private” or “common law” space and avoid modern statutory obligations. **This has been consistently rejected by UK courts**, including in tax avoidance and regulatory compliance cases.
---
### Final Thought:
You're free to **believe in and structure** your affairs according to equity, but **if your trust interacts with any UK-regulated systems** (banks, land registries, professionals, etc.), then **statutory obligations apply**—regardless of how the trust is declared.
---
If you're trying to keep your affairs private or avoid unnecessary exposure, there may be **legitimate and legal structuring options**—but declining to register based solely on an equity claim **won’t hold up** in practice.
8
12 comments
Private trusts according to chatGPT
Leaderboard (30-day)
1
+227
2
+196
3
+166
4
+109
5
+100
Powered by