Delaware Statutory Trusts

Business trusts have been recognized by the Delaware common law since 1947, however, there was no express statutory recognition of the business trust in Delaware until the passage of the Delaware Statutory Trust Act (originally named the Delaware Business Trust Act), 12 Del.C. c.38 (the Act), in 1988.

The Act was drafted by a committee of the Delaware State Bar Association comprised principally of practitioners who focused their practices in the corporate finance area. The goal of the drafting committee was to increase the utility of the business trust in modern financing transactions by overruling those principles of the common law of trusts which were deemed disadvantageous and including certain new provisions to statutorily authorize a high degree of freedom of contract between the trustor and the trustee in determining their respective liabilities and the manner in which the trust could be administered.