Superannuation Funds are based on the legal concept of a “trust”.
Article 2 of the Hague Convention on the Law Applicable to Trusts states:
“For the purposes of this Convention, the term “trust” refers to the legal relationship created – inter vivos or on death – by a person, the settlor, when assets have been placed under the control of a trustee for the benefit of a beneficiary or for a specific purpose.
A trust has the following characteristics:
- (a) the assets constitute a separate fund and are not part of the trustee’s own estate,
- (b) title to the trust assets stands in the name of the trustee or in the name of another person on behalf of the trustee,
- (c) the trustee has the power and the duty, in respect of which he is accountable, to manage, employ or dispose of the assets in accordance with the terms of the trust and the special duties imposed upon him by law.
The reservation by the settlor or certain rights and powers, and the fact that the trustee may himself have rights as a beneficiary, are not necessarily inconsistent with the existence of a trust”.
This definition was incorporated into English law by the Recognition of Trusts Act 1987.
Australia is a signatory to the Hague Convention on the Law Applicable to Succession to the Estates of Deceased Persons (1989) and the Hague Convention on the Law Applicable to Trusts and on their Recognition (1991) and has enacted the Trusts (Hague Convention) Act 1991 to implement the latter within Australia.