Sec. 1.4. The Difference Between the Statutory Business Trust and the Other Common Law Trusts
In the taxonomy of common law trusts the statutory business trust is a species of the commercial trust category within the common law trusts. The fundamental difference is that the statutory business trust is formed under a statutory business trust statute and not under common law. As a creation of statute, the primary differences are:
A. Legal Person
As a creation of statute, a statutory business trust is an unincorporated business entity which is a legal person. It is separate and distinct from it constituents.
B. The Doctrine of Limited Liability
The constituents are afforded limited liability by statute just as the interest holders of any other unincorporated business entity and shareholders of a corporation. The doctrine of limited liability applies to statutory business trusts without any of the uncertainties as to limited liability which burden commercial trusts.
C. Fiduciary Duties
The fiduciary duties with which the trustee must comply are set forth in an organized and systematic manner. As they are expressed in the statutes, they provide improved guidance to judges who must construe and apply any relevant fiduciary duty to the facts of a particular case.
D. Business Purpose
The statutory business trust can pursue any legal business purpose. The purpose cannot be primarily donative.