england-and-wales trusts-and-estates
What are the simplest examples of a long chain of trusts of equitable proprietary interest in property?
<p>I don't understand how &quot;<em><strong>such chains of trusts of the equitable proprietary interest is very significant commercially in respect of trusts of securities and of the rights to such securities.</strong></em> What are the most basic, intelligible examples of this? I don't know much about &quot;securities&quot; either...I'm just familiar with Exchange Traded Funds and stocks.</p>
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<h3>(ii) Trustees’ rights</h3>
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<p>Once Adam has conveyed the land to Brenda and Clare, they will have joint legal title to it
and will be treated at Law as the joint owners of the property. Since, however, they hold the
property on trust, they will not have a beneficial interest in the property. The existence of
the trust strips the trustees of the benefits of legal ownership.<br />
      Although many trusts involve the trustee having legal title to property, this is not always
the case. It is possible to declare a trust of an equitable proprietary interest in property. So,
for example, a beneficiary of a trust is able to declare that they hold their equitable proprietary
interest on trust for another. <strong>It follows that there can be a chain of trusts.</strong> So, for example,
money might be transferred to Emma to hold on trust for Frank. He might declare
a trust of his equitable proprietary interest for Grace. So Emma has the legal title to the
money that is held on trust for Frank, who holds his equitable interest on trust for Grace.
This chain could continue indefinitely. It is only the trust of the money held by Emma for
Frank that involves a trust of legal rights; all of the other trusts will involve a trust of the
beneficiary’s equitable interest in the money that is held on trust for them.40 <em><strong>The possibility
of creating such chains of trusts of the equitable proprietary interest is very significant
commercially in respect of trusts of securities and of the rights to such securities.</strong></em></p>
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<p>Virgo, <em>The Principles of Equity &amp; Trusts</em> 2020 4 edn. Page 47. All emboldenings and italics are mine.</p>

<p>Most publicly traded securities are held through chains of beneficial interests. Typically the share or bond certificates are held in the name of a nominee company which in turn are held by a brokerage for the benefit of its customers, and not infrequently the brokerage account is in turn owned by a revocable trust or other trust for the benefit of the beneficial owners.</p>
<p><a href="https://www.lexisnexis.com/documents/pdf/20080507045332_large.rtf" rel="nofollow noreferrer">The commercial reality</a> is discussed in the official comments and memorandum discussions of Article 8 of the Uniform Commercial Code in the United States. Shares held in nominee form all called &quot;<a href="https://en.wikipedia.org/wiki/Street_name_securities" rel="nofollow noreferrer">street name securities</a>&quot; in the U.S. and the U.K.</p>
<p>Ownership of mortgages sold in the secondary market in the U.S. is handled similarly. The original lender typically transfers nominal status as holder of the note obligation to <a href="https://www.mersinc.org/products-services/mers-system/faq" rel="nofollow noreferrer">MERS</a>, a nominee firm, that in turn is held by a trust that owns a pool of mortgages called a mortgage backed security, that is in turn owned by secondary market investors through brokerage account trusts and often through personal trusts or a charitable pooled trust for the benefit of ultimate beneficial owner charities. See <a href="https://www.bankrate.com/mortgages/secondary-mortgage-market/" rel="nofollow noreferrer">here</a>.</p>
<p>Commodities such as gold are often traded this way as well, either in the system above and under a parallel system of negotiable warehouse receipts.</p>
<p>While the legal environment in the U.K. for securities ownership is not identical, the basic economic reality of multiple layers of indirect ownership is the norm there as well.</p>
