DO YOU HAVE TRUST ISSUES? THE SURETY’S USE OF TRUST FUND RIGHTS IN BANKRUPTCY
Introduction
It has been said “where large sums of money are concerned, it is advisable to trust nobody.”3 Yet trusts abound in statutes, indemnity agreements and contracts, and trusts are even implied by law under certain circumstances. The question that arises is what rights flow from such trusts in the bankruptcy context and the corollary question is how can the surety use such rights to its advantage. To address these questions, this paper will first look at the nature of trusts in general, their characteristics and elements, the duties and obligations of the parties and the rights of the beneficiaries in general. Forming a solid understanding of the law of trusts is essential for the surety to be able to identify and assert such rights in the myriad of circumstances which may arise. Next, the paper will focus on the various forms of trusts, such as statutory trust funds, contractually created trusts and trusts at common law.