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Shortcomings in the Trust Law, 1979

Published online by Cambridge University Press:  12 February 2016

Joshua Weisman
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The Trust Law, 1979, came into force at the beginning of February, 1980, resolving the debate of many years as to whether the institution of private trusts is recognized in the Israeli legal system. The debate was carried on in the cases, and in scholarly articles, but despite all the ink that was spilt, the law remained uncertain. Two views recently expressed on the question, one by Cohn J. in the case of Inzel v. Kugelmas, and the other by experts in the Ministry of Justice in their preamble to the Trust Bill, are clear evidence of the uncertainty. Cohn J. wrote:

The learned advocate was not aware that this Court has already recognized the existence of private trusts in Israeli Law several times, and will not turn the clock back now…

The experts in the Ministry of Justice, on the other hand, stated that—

The courts in Israel ruled, both in the time of the Mandate and after the establishment of the State, that the institution of private trusts has not been incorporated into Israeli law.

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Articles
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Israel Law Review , Volume 15 , Issue 3 , July 1980 , pp. 372 - 417
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Copyright © Cambridge University Press and The Faculty of Law, The Hebrew University of Jerusalem 1980

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References

2 See, e.g. Tedeschi, G., “Transactions of Trusts in Our Times” (1943–1944) 1 HaPraklit 78Google Scholar; Witkowsky, A., “Private Trusts in Palestine” (1946/1947) 3 HaPraklit 99Google Scholar; Tedeschi, G., “On Private Trusts, English-style, in Palestine” (1946/1947) 3 HaPraklit 306Google Scholar; Dickstein, P., “On Ways of Completing the Law in Palestine and on Private Trusts” (1947/1948) 4 HaPraklit 4Google Scholar; Tedeschi, G., “More on Private Trusts, English-style, in Palestine” (1947/1948) 4 HaPraklit 81Google Scholar; Sharf, M., “Does the Private Trust Exist in Israel?” (1951/1952) 8 HaPraklit 238Google Scholar; Yifrah, S., “Borrowed Name” (1951/1952) 8 HaPraklit 39Google Scholar; Zeltner, Z., “Private Trusts in Israel” (1959) 15 HaPraklit 214Google Scholar; Tedeschi, G., Studies in Israeli Law (Jerusalem, 2nd. ed., 1959) 168, 169Google Scholar; Doukhan-Landau, L., Equitable Rights to Land (Jerusalem, 1969) 53Google Scholar; Weisman, J., Book Review of Doukhan-Landau's above-mentioned book, (1969) 1 Mishpatim 475, 477Google Scholar; Shamgar, M., “Commentary on the Trust Bill (1972/1973) 23 Ro'eh Heshbon 197Google Scholar; Barak, A., Agency (Commentary on the Contract Laws, ed. by Tedeschi, G.) (Jerusalem, 1975) 423Google Scholar; Zeltner, Z., “The Trust Bill” (1976) 2 Tel Aviv U. Studies in Law 88Google Scholar; Kerem, S., “Laws of Trust in Israel” (1978) 31 HaPraklit 233Google Scholar; Reichman, A., “The Effects on Property Rights of the Doctrine of Marital Joint Ownership of Property” (1978) 6 Iyunei Mishpat 289, 312.Google Scholar The case-law which evolved on this subject is cited, in the main, in the above sources.

3 Inzel v. Kugelmas (1975) (I) 29 P.D. 663, 666.

4 (1975) H.H. 22.

5 At the end of 1974. The contradiction cannot, therefore, be resolved by saying that the two quotations describe situations at different periods of time.

6 Gross, I., “On the Question of Trustees for Bonds” (1970) 26 HaPraklit 500, 505.Google Scholar See also Kerem, supra n. 2, at 239. Pension funds, which are popular in Israel, have also been interpreted by some of the judges as trusts. Refek Electronics Ltd. v. Taxation Officer for Large Entreprises (1977) (I) 31 P.D. 681, 690, and cf. p. 694.

7 Zeltner, supra n. 2, at 97.

8 International Encyclopaedia of Comparative Law, vol. VI, chap. 11, pp. 84–87. Fragmented ownership in the institution of trusts will be discussed at a later stage.

9 Ibid., at 93–104. Merryman, J. H., “Ownership and Estate” (1974) 48 Tulane L.R. 93–104, 916, 939.Google Scholar

10 See the address of the Minister of Finance at the time, Levi Eshkol, when he submitted the Law to the Knesset for a first reading. 31 Divrei HaKnesset 1123–4.

11 Doukhan, M., Land Law in the State of Israel (Jerusalem, 2nd ed., 1953) 75.Google Scholar

12 Doukhan-Landau, supra n. 2.

13 Trust Law, 1979, sec. 42. No section was included in the Trust Law on the matter of the independence of the Law and its departure from English law as a complementary source under Art. 46 of the Palestine Order-in-Council.

14 Zeltner, supra n. 2, at 97.

15 Zweigert, K. & Kötz, H., An Introduction to Comparative Law (Amsterdam, 1977) 277Google Scholar; Lawson, F. H., Introduction to the Law of Property (Oxford, 1958) 77–8.Google Scholar

16 In charitable trusts, and trusts for particular purposes, such as in favour of animals, there is a problem with the title of the beneficiary in the trust property. See Int. Encyclopaedia of Comp. Law, supra n. 8, at 5.

17 For more detail see the section on Transactions with Trustees.

18 Sec. 6 of the Trast Bill, 1974 (H.H. 23).

19 Keeton, G.W. & Sheridan, L. A., The Law of Trusts (London, 10th ed., 1974) 5, 13, 16Google Scholar; Underhill's Law Relating to Trusts and Trustees (London, 13th ed., 1979) 29; Parker, D. B., The Modern Law of Trusts (London, 4th ed., 1979) 14Google Scholar; Restatement of Trusts, 2d, §§2, 7, 8; Bogert, G.G. & Bogert, G. T., Handbook of the Law of Trusts (Paul, St., Minn., 5th. ed., 1973) 106Google Scholar; Walker, D.M., Principles of Scottish Private Law (Oxford, 2nd. ed., 1975) 1774Google Scholar; Civil Code Revision Office, Committee on the Law of Trust, Report of Trusts (Montreal, 1976), Article 1: “A trust is an act by which a person transfers property to be held either for the benefit of a person or for the fulfilment of a purpose of public or private interest.”

20 (1972) H.H. 228.

21 Shamgar, M., “Commentary on the Trust Bill” (1972/1973) 23 Ro'eh Heshbon 197.Google Scholar

22 The meeting of the Constitutional, Legal and Judicial Committee of January 16, 1978.

23 I. Berman, M.K. at the meeting of the sub-committee on February 2, 1979, and at the Knesset meeting, during the second and third readings, on July 24, 1979 (This has not yet been published in Divrei HaKnesset). Sec. 4 of the Law does not contradict our assumption that in trusts, title must be transferred to the trustees. Sec. 4 leaves it to the trustee to choose whether or not to inform the Director of Registration of the existence of the trust, but this does not mean that there is no obligation to transfer the ownership of the trust property to the trustees and to register it in their names. The choice given in sec. 4 relates only to indicating the existence of the trust.

24 15 L.S.I. 79 at 84.

25 (1961) H.H. 158, 165; 31 Divrei HaKnesset 1123, 1124.

26 That the term “control” of the property contains the requirement of transfer of title emerges also from the way in which the term “control” is used in the literature on trusts in English law. Thus, for example, Underhill says: “A trust is an equitable obligation, binding a person (who is called a trustee) to deal with property over which he has control…” (supra n. 19 at 1), There is no doubt that in using the word “control”, Underhill is not trying to say that control unaccompanied by title is sufficient. See op. cit. at 29.

27 The accepted form is joint ownership, so that upon the death of a trustee “survivorship” applies without invoking the laws of succession. See e.g. Charitable Trusts Ordinance, 1924, sec. 25; Lawson, supra n. 15 at 64.

28 See, e.g. Charitable Trusts Ordinance, 1924, sec. 24.

29 See supra, n. 27, and see sec. 9(4) of the Law.

30 In the commentary on p. 87 to the Succession Bill, 1952, there is a comparative survey of the positions in France, Italy, Belgium, Sweden, Switzerland, Holland, Spain, Austria and Germany. See also Int. Encyclopaedia of Comp. Law, vol. IV, chap. 11, pp. 37, 88, 89, 105–7, and cf. Kruse, V., The Right of Property (London, 1939) vol. 1, pp. 356–7.Google Scholar

31 “The rule of phantoms”, in the words of Kister J. in Greiber v. Greiber (1975) (II) 29 P.D. 673, 679.

32 Cf. Merryman, supra n. 9, at 938.

33 Succession Bill, 1952, in the commentary on p. 88. See also Succession Bill, 1958, commentary on p. 235.

34 See Nizhani v. Kurz (1979) (II) 33 P.D. 22. Mortmain found expression in the Charitable Trusts Ordinance as well. See M. Doukhan supra n. 11, at 77.

35 See also nn. 36 and 37 below. The inability of the settlor to revoke the transfer will usually distinguish a trust from a will. For an exception to this, see sec. 18(b) of the Trust Law, and see Scott on Trusts (Boston, 3rd ed., 1967) vol. 1, pp. 464, 478–9.

36 “In a modern economy, the existence of a trust continues to be of importance, mainly because it is suited to making various long-term arrangements with respect to property. A comparison of the provisions of sec. 42 of the Succession Law, 1965, and the possibilities open to us by means of trust law will illustrate this.” Shamgar, M., “Commentary on the Trust Law” (1972–1973) 23 Ro'eh Heshbon 197.Google Scholar It appears that the author's assumption is that sec. 42 of the Trust Law will not apply to the creation of future rights in the framework of trusts.

37 Inzel v. Kugelmas, supra n. 3, at 666. We do not refer here to the procedural solution that is mentioned there.

38 The question arose before the Trust Law came into force.

39 See e.g. Lewin on Trust (London, 16th ed., 1964) 71 et seq., 86.

40 Simes, L. and Smith, A., Future Interests, § 1117Google Scholar, quoted by Donahuc, , Kouper, & Martin, , Cases and Materials on Property (St. Paul, Minn., 1974) 672Google Scholar; Posner, R., “The Economic Theory of Property Rights” in: Ackerman, B. A., ed., Economic Foundations of Property Law (Boston, 1975) 12Google Scholaret seq.; Parker, supra n. 19, at 92.

41 Simes, L. M., Handbook of the Law of Future Interests (St. Paul, Minn., 2nd ed., 1966) 254.Google Scholar

42 Lawson, supra n. 15, at 144.

43 Simes, supra n. 41, at 255; Lawson, ibid.

44 Lawson, id. at 145.

45 For one or two generations.

46 See supra n. 43.

47 (1681) 2 Swans 454, at 460, per Lord Nottingham, L.C. cited by Megarry, and Wade, , The Law of Real Property (London, 4th ed., 1975) 199.Google Scholar

48 Inzel v. Kugelmas (supra n. 3) is one of the few cases in which this question came up for discussion before the Supreme Court.

49 19 L.S.I. 58.

50 Commentary on sec. 27 of the Bill, (1975) H.H. 22, 27.

51 G.G. Bogert & G.T. Bogert, supra n. 19, at 192; Int. Encyclopaedia of Comp. Law, supra n. 8, at 37, 42, 50; Lawson, supra n. 15, at 141.

52 Bogert, supra n. 19, at 546–551; Underhill, supra n. 19, at 601 et seq.

53 “There is a public policy against permitting an indestructible trust of long duration …” Restatement on Trusts, 2d, § 62, p 169.

54 For example: with respect to parents, sec Capacity and Guardianship Law, 1962 (16 L.S.I. 106) sec. 21 (on a legal act between the minor and his parents to which the court had not given its prior consent); with respect to appointed guardians, see secs. 49, 66 of that Law (on certain acts which require the consent of the court, and on a defect in the appointment of a guardian); with respect to the executor of an estate, see the Succession Law, 1965 (supra n. 49) sec. 94 (on certain acts which require the consent of the court). See also sec. 73 (on reliance on a succession order or probate which were later amended). With respect to an agent, see Agency Law, 1965 (19 L.S.I. 231) sec. 15 (on agency which has expired); sec. 6(b) does give a certain measure of protection to the third party, but it does not give effect to a transaction made in the principal's property. See also sec. 3 (a), which, under certain circumstances, may be of help to a third party in good faith. See also Tedeschi, G., Essays in Law (Jerusalem, 1978) 352–60.Google Scholar On the Agency Law, see Barak, A., Agency Law, 1965 (Tedeschi, G. ed., 1975)Google Scholar, in the commentary on these sections. As to company directors, the Turkand case expresses the concept of validating defective transactions on the basis of the good faith of the third party, but there are many restrictions on the application of this concept. On the background of transactions with trustees, as described in detail below near n. 87, the restriction according to which the registered documents of a company are considered to give notice to a third party, thus depriving him of a defence of good faith based on his ignorance of their contents must be stressed. See Gower, L.C.B., The Principles of Modern Company Law (London, 3rd ed., 1969) 150Google Scholaret seq.; Iyon v. Shimshon (1956) (III) 26 P.E. 97; Malter v. Yokne'am Cinema Co. (1956) 10 P.D. 1494, 1500–1; Lot 132 Ltd. v. Ben-Yehuda (1969) (I) 23 P.D. 634, 637.

55 Lawson, supra n. 15, at 45.

56 On this see above, chap. B.

57 Preamble to the Trust Bill, 1974 (1975) H.H. 22. On the rationale in English law for the ability of a trustee to transfer good title to a purchaser in good faith and for consideration, see Bogert, supra n. 19, at 601.

58 Lawson, supra n. 15, at 144, 146; Hanbury, & Maudsley, , Modern Equity (London, 10th ed., 1976) 25–7Google Scholar; Snell's Principles of Equity (London, 27th ed., 1973) 60–2; Int. Encyclopaedia of Comp. Law, supra n. 8, at 7, 62, 64, 67, 68, 81, 82, 83.

59 Int. Encyclopaedia of Comp. Law, id. 67, n. 509.

60 Restatement on Trusts, 2d. § 297.

61 This is the approach under the Uniform Trustee's Power Act, sec. 7, and it is accepted in several North-American jurisdictions, Scott on Trusts, supra n. 35, vol. IV, p. 2406.

62 Sec. 5. The relationship between sec. 5 and sec. 14 will be discussed below.

63 We shall presently deal with the problem of consideration.

64 As for the use of the term “equitable interest” in the context of Israeli legislation, which is generally believed to follow continental legal systems, see e.g. Shtukman v. Spitani (1974) (II) 28 P.D. 182, 187; Attias v. Director of Registration (1976) (III) 30 P.D. 527, 530; Estate of Blum v. Nahum (1977) (II) P.M. 16, 19.

65 The fact that the two expresions “knew or ought to have known” and “good faith” (or absence of “good faith”) are used synonomously can be seen also from the way that they are used in the law of Equity, from which our legislator drew his inspiration. See the preamble to the Trust Bill, 1974, and Restatement on Trusts, 2d, sec. 284, Comment, sec. 297; Pomeroy, , Equity Jurisprudence (San Francisco, 5th ed., 1947) vol. III, pp. 19, 49Google Scholar; and cf. Barak, , Agency Law, 1965Google Scholar, supra n. 2, at 588, who states that in the context of the Agency Law, a person may be considered as operating in good faith even if he ought to have known of the facts which, if he had in fact known of them, would have removed his good faith. But see Sussman, Y., “Good Faith in Contract Law — the Bond with German Law” (1979) 6 Iyunei Mishpat 485.Google Scholar

66 See secs. 9(b), 13(e), 14.

67 See also sec. 4 of the Pledges Law, 1967 (21 L.S.I. 44); sec. 12 of the Movable Property Law, 1971 (25 L.S.I. 175); sec. 23 of the Land Law, 1969 (23 L.S.I. 283); sec. 34 of the Sale Law, 1968 (22 L.S.I. 107); sec. 13 of the Contracts (General Part) Law, 1973 (27 L.S.I. 117). And cf. Agency Law, 1965, secs. 6(b), 7, 15, 18.

68 Snell's Principles of Equity (London, 27th ed., 1973) 46.

69 Underbill, supra n. 19, at 771; Scott, supra n. 35; Restatement on Trusts, 2d, s. 289. And see near n. 81 below.

70 Preamble to the Trust Bill (1975) H.H. 22.

71 See secs. 9(b), 13(e), 14. See also n. 83 below.

72 On the defect of sec. 4 of the Pledges Law, see Weisman, J., Security Interests Law, 1967 in Tedeschi, G. ed., Commentary on Laws of Contract (Jerusalem, 1974) 144, 145.Google Scholar

73 Commentary to sec. 7 of the Trust Bill (1975) H.H. 22, 24.

74 Sec. 4. Thus the legislature abandoned the opposite position which it had adopted in the Charitable Trust Ordinance (Amendment) Law (Amendment no. 2), 1973, secs. 3(2), 25a. In presenting this Amendment to the Knesset, the Minister of Justice, Y. S. Shapira, said that the most important of the various amendments proposed was that which made registration of the trust, as well as of the property in the name of the trustee, obligatory, 65 Divrei HaKnesset 511, and see the statement of M. K. Ankorion there, 507.

75 See Trust Bill, 1974, commentary to sec. 7 (1975) H.H. 23, 24.

76 Sec. 5. We shall shortly discuss the connection between this section and sec. 14. Even though in the Trust Bill, specific mention was made of the intention to enable registration of the existence of a trust in shares and in bonds in the Companies Register (see supra n. 75), it is not clear whether this can be implemented. The problem lies in sec. 29(b) of the Companies Ordinance, according to which: “No notice of a trust, whether explicit, implied or derived, will be registered in the register or will be accepted by the Registrar with reference to any company”. To this we must add the provision in sec. 42 of the Trust Law, according to which the provisions of the Trust Law do not apply when another law contains special provisions on the matter. Thus, we are confronted with a contradiction between the intention of the legislature (to allow registration of a trust in the companies register as well) and the way in which it formulated this provision (according to which it would appear that preference is given to the provision in the Companies Ordinance preventing the registration of a trust with the Registrar of Companies). The courts will have to decide how to manouvre here. From an analytical point of view, in the Trust Law the legislature made it clear that he is interested in enabling trusts to be registered in registers which are maintained by law. In this regard, there is no difference if the trust property is a bond or some other item. Support for the view that the legislator intended that trusts should be able to be registered in the Companies Register can be found in the Charitable Trusts Ordinance Amendment Law (Amendment no. 2) 1973 and its legislative history. According to the original Bill ((1972) H.H. 227) the Director of the Land Registry was to have registered a note in the Land Register to the effect that land had been made subject to a charitable trust (sec. 2 of the Bill). In the debate in the Constitutional, Legal and Judicial Committee, a number of the committee members objected to the provision being limited to land alone, and sought to extend the section in such a way that registration would be obligatory for shares as well. And indeed, in the final formulation of the Law, the Bill was changed, and sec. 2 provided in a general manner that in every case in which property is endowed to a charitable trust, a note indicating the existence of the trust must be entered in the appropriate register.

77 See supra, near n. 60.

78 Near n. 55.

79 See near n. 60.

80 Compare sec. 23 of the Trast Bill, 1974, with sec. 14 of the Law.

81 For more on this matter, see Freidmann, D., “Comments on the Rights of Original Owners Against Third Parties in the Light of New Israeli Legislation” (1974/1975) 4 Iyunei Mishpat 245, 253 n. 36, 260.Google Scholar

82 Sec supra nn. 69, 70, 71.

83 On the differences that arc nevertheless likely to arise between a third party who was not in good faith and a third party who did not give consideration, see Scott, supra n. 35, sec. 292.

84 Restatement on Trusts, 2d, sec. 289, 56; sec. 292 (1), 64.

85 Id., at sec. 291 (1), 57.

86 Id., at sec. 297 comment a, 74.

87 See sec. 4 of the Trast Law.

88 See supra near n. 61.

89 Restatement on Trusts, 2d, sec. 296, 73; Scott, supra n. 35, vol. IV, p. 2406.

90 The word “endowment” at the beginning of the section means, in the words of the legislature, an “express trust”, which is created by the unilateral action of the settlor. See secs. 2, 17.

91 Carbonnier, J., Droit Civil (Paris, 1975) vol. III, p. 7Google Scholar; Keeton, G.W., Modern Developments in the Law of Trusts (Belfast, 1971) 190.Google Scholar

92 Execution Law, 1967 (21 L.S.I. 112) secs. 21, 34, 43. See esp. sec. 28 (b), from which one can see that the presupposition is that if the debtor has title to property, it is subject to the claims of his creditors. See also the Bankruptcy Ordinance, 1936, sec. 37.

93 Execution Law, 1967, sec. 38.

94 Execution Law, 1967, sec. 22. Bankruptcy Ordinance, 1936, sec. 37.

95 Execution Law, 1967, sec. 39.

96 Execution Law, 1967, sec. 22.

97 Execution Law, 1967, sec. 50. Family Law Amendment (Maintenance) Law, 1959, sec. 14.

98 Ibid., and Wage Protection Law, 1958, sec. 8 (the exemption applies, under this section, to payments from pension funds as well). On severance pay, see also Severance Pay Law, 1963, sec. 26.

99 National Insurance Law (Consolidated Version) 1968, secs. 135, 138. And see Municipalities Ordinance (New Version), sec. 185.

100 Cooperative Societies Ordinance, 1933, sec. 25.

101 See Rosenfeld, S., Execution Law (Tel Aviv, 2nd ed., 1969), 40.Google Scholar

102 The common rationale behind most of the exceptions is that the property is necessary to supply the vital needs of the debtor. As for shares in a cooperative society, the reason for immunity from creditors is that the cooperative societies are of a personal nature, and thus incompatible with the possibility of the shares being sold to third parties in distraint and execution proceedings. On this, see Weisman, J., “The Kibbutz, Israel's Collective Settlement” (1966) 1 Is.L.R. 99, 115, 116, 118, 119.Google Scholar

103 Cf. Scott, supra n. 35, sec. 152, p. 1137.

104 Transfer of Obligations Law, 1969, sec. 1. On systems of law which do not allow for such limitation, see Ben-Porath, M., The Transfer of Obligations Law, 1969Google Scholar in Tedeschi, G., ed., Commentary on Laws of Contract (Jerusalem, 1974) sec. 6, n. 76.Google Scholar

105 Transfer of Obligations Law, 1969, sec. 5; Land Law, 1969, sec. 87; Shipping (Vessels) Law, 1960, sec. 58. See also Weisman, J., Security Interests Law, 1967Google Scholar, supra n. 72, sec. 50.

106 Hire and Loan Law, 1971, sec. 22. The effect of such limitation is more limited in the lease of land than in the lease of movable property. Sec. 22(b).

107 See Tedeschi, G., “Easements which are not for the Benefit of Land” (1977) 7 Mishpatim, 456, 488Google Scholar; Ben-Porath, supra n. 104, at sec. 3.

108 Or if the court so orders (sec. 20). For the definition of “instrument of endowment” see sec. 17(a) of the Law.

109 Int. Encyclopaedia of Comp. Law, vol. VI, chap. 11, p. 57; Lewin on Trusts (London, 16th ed., 1964) 96; Keeton, & Sheridan, , The Law of Trusts (London, 10th ed., 1974) 151.Google Scholar

110 Int. Encyclopaedia of Comp. Law, op. cit., at 59.

111 Id.; Parker, supra n. 19, at 114 et seq.; Keeton, supra n. 91 at 151 et seq.

112 Underbill, supra n. 19, at 145 et seq.; Hanbury, supra n. 58, at 224–5. For a comparison of the English and American institutions, see Keeton, supra n. 91, at 198–200.

113 Scott, supra n. 35, sec. 160, pp. 1240–1; sec. 1286.

114 Bogert, supra n. 19, at 145.

115 “A Rationale for the Spendthrift Trust” (1964) 64 Columb.L.R. 1323, 1327; Nichols v. Eaton, 91 U.S. 716 (1875); Int. Encyclopaedia of Comp. Law, op. cit., at 58.

116 Scott, supra n. 35, sec. 152, pp. 1136–7; Broadway National Bank v. Adams, 133 Mass 170, 43 Am Rep. 504 (1882).

117 Scott, supra n. 35, sec. 157.5, at p. 1230. One of the most vigorous defenders of the spendthrift trust is Costigan, who said: “In respect of the property supplied in that way, the creditor is seeking to reap where he has not sown, and to take what he was never meant to have. It is a moral theft, even if in a given jurisdiction, it is legally sanctioned.” Costigan, G. P., “Those Protective Trusts which are Miscalled ‘Spendthrift Trusts’ Reexamined” in Radin, and Kidd, , eds., Legal Essays in Tribute to McMarray (Berkeley, 1935) 88.Google Scholar Even Costigan, however, preferred to limit the effect of a spendthrift trust to those amounts needed by the beneficiary for his livelihood. Loc. cit., 92–3.

118 Restatement on Trusts, 2d, sec. 152, Comment j.

119 Id. at sec. 153, Comment c. In a number of states in the United States, this is not so, and the principal is subject to the same law as the income. Loc. cit.

120 Costigan, supra n. 117, at 86, n. 23.

121 Scott, supra n. 35, at sec. 152, p. 1138.

122 Kruse, V., The Right of Property (London, 1939) vol. I, p. 7et seq.Google Scholar

123 Scott, supra n. 35, at sec. 152, p. 1135.

124 Kruse, op. cit.

125 Cf. Scott, supra n. 35, at sec. 157, p. 1231; Bogert, supra n. 19, at 154; Griswold, E. N., Spendthrift Trusts (New York, 1947) 26–8.Google Scholar Even an ardent supporter of the spendthrift trust such as Costigan (supra n. 117) recognizes the weakness of the argument which defends such trusts on the basis of respecting the wish of the owner to do as be pleases with his property. See supra n. 117, at pp. 92–3.

126 Scott, supra n. 35, at sec. 152, p. 1137; Bogert, supra n. 19, at 149. In the United States, the law is somewhat different with respect to the effect of a transfer of assets, a condition of which was that the right of the recipient will lapse if his creditors seek to seize such assets, or if he becomes bankrupt. As distinguished from a transfer conditional upon the creditors not being able to collect from the property, here, the debtor will not be able to continue enjoying property from which his creditors cannot collect. In a transfer of title conditional upon the lapse of the right if the creditors seek to seize the property, or if the recipient becomes bankrupt, the condition has no force. The same applies if the right which was granted is an equitable interest (even though in this case, an opposite view has been expressed). In contrast, a condition attached to the grant of a right—either legal or equitable—whereby the grant lapses at the death of the transferee is valid and enforceable. Scott, op. cit., sec. 150, pp. 1125–7; Parker, supra n. 19, at 113.

127 “A Rationale for the Spendthrift Trust” (1964) 64 Colum.L.R. 1323, 1333–34.

128 It appears that not everyone thinks that the category of those meriting the protection of the spenthrift trust cannot be adequately defined. Griswold, supra n. 125, at 639–40.

129 Scott, supra n. 35, at s. 152, p. 1139.

130 Griswold, supra n. 125, at 637.

131 See supra, n. 102.

132 Griswold, supra n. 125, at 637.

133 Scott, supra n. 35, at sec. 1575, p. 1230. And also: “Certainly no man should have an estate to live on, but not an estate to pay his debts with. Certainly property available for the purposes of pleasure or profits should be also amenable to the demands of justice.” Tillinghast v. Bradford, 5, R.I. 205, 212 (1958), per Ames C.J. cited by Bogert, supra n. 19, at 150.

134 Bogert, supra n. 19, at 154; Griswold, supra n. 125, at 639–40; Paton, , Jurisprudence (Oxford, 4th ed., 1972) 530.Google Scholar

135 Bogert, op. cit., at 150, n. 24.

136 Restatement on Trusts, 2d, sec. 153; Bogert, supra n. 19, at 154.

137 Int. Encyclopaedia of Comp. Law, supra n. 8, at 94; Scott, supra n. 35, at sec. 152, p. 1139, sec. 152.1, p. 1143; Bogert, supra n. 19, at 152–4; Keeton, supra n. 91, at 154, 290.

138 Scott, supra n. 35, at sec. 152.1, p. 1142.

139 Bogert, supra n. 19 at 154. And cf. “A Rationale for the Spendthrift Trust” (1964) 64 Colum.L.R. 1323, 1333.

140 Paton, supra n. 134, at 530.

141 Scott, supra n. 35 at sec. 152, p. 1138. Griswold, supra n. 125 at 639–40.

142 (1964) 64 Colum.L.R. 1323, at 1333–34.

143 Scott, supra n. 35, at sec. 115.

144 Restatement on Trusts, 2d, sec. 156; Scott, op. cit., secs. 114, 156 pp. 1190–91; Keeton, supra n. 91, at 153; and cf. Griswold, supra n. 125 at 644; Keeton, op. cit., at 199.

145 Restatement on Trusts, 2d, sec. 157; Scott, op. cit., at sec. 157, pp. 1206–1221.

146 On the fact that the situation in England and the United States is different from that of Israel, see supra near n. 109, 110. On the variety of attitudes accepted in the United States, sec also Scott, supra n. 35 at sec. 152, p. 1134, sec. 152.1, p. 1143 et seq.

147 The Bill was much less extreme on this point. Sec. 4 of the Trust Bill, 1974, stated that the beneficiary's right could not be seized “as long as it had not materialized”, and in the commentary to the section, it was stated that “as long as the essence of the beneficiary's right has not been clarified and established to the point of a defined claim from the trustee,… seizure by creditors … should be prevented …”. In sec. 20 of the Law as adopted no such limitation is mentioned. Also, the discussions on the Bill in the Constitutional, Legal and Judicial Committee were conducted on the assumption that the beneficiary would be someone who could not care for himself, and the trust would guarantee him what he needed for his livelihood. However, the members of the Committee did not see to it that their supposition found suitable expression in the wording of the Law, in which we find no restriction, neither with respect to the classes of protected beneficiaries, nor with respect to the amounts protected.

148 On the various meanings of “maintenance” see Tedeschi, G., “The Obligation of Maintenance in our Civil Law” (1975) 6 Mishpatim 242Google Scholar; on the meaning of “taxes”, sec Yoran, A., “Legislation Control of the Israeli Tax System — Innovations and Defects” (1976) 7 Mishpatim 310, 314.Google Scholar

149 It appears that in bankruptcy proceedings, such a trust will be considered as a fraud on the creditors, and therefore, invalid. Keeton, supra n. 91, at 199. In other proceedings, it may be possible to invalidate such a trust by concluding that it is contrary to public order. Contracts (General Part) Law, 1973, secs. 30, 61(b).

150 On the various types of trusts, see sec. 2 of the Law. On a trust by endowment, see sec. 17 of the Law.

151 Sec. 3(b).

152 Sec. 8(c).