Trusts developed in England at the time of the Crusades, during the 12th and 13th Centuries.

At the time, land ownership in England was based on the feudal system. When a landowner left England to fight in the Crusades, he needed someone to run his estate in his absence, often to pay and receive feudal dues. To achieve this, he would convey ownership of his lands to a friend, on the understanding that the ownership would be conveyed back on his return. However, crusaders would often return to find the legal owners' refusal to hand over the property.

Unfortunately for the crusader, English law did not recognise his claim. As far as the courts were concerned, the land belonged to the trustee, who was under no obligation to return it. The crusader had no legal claim.

The disgruntled crusader would then petition the king, who would refer the matter to his Lord Chancellor. The Lord Chancellor could do what was "just" and "equitable", and had the power to decide a case according to his conscience. At this time, the principle of equity was born.

The Lord Chancellor would consider it unjust that the legal owner could deny the claims of the crusader (the "true" owner). Therefore, he would find in favour of the returning crusader. Over time, it became known that the Lord Chancellor's court (the Court of Chancery) would continually recognise the claim of a returning crusader. The legal owner would hold the land for the benefit of the original owner, and would be compelled to convey it back to him when requested. The crusader was the "beneficiary" and the friend the "trustee". The term use of land was coined, and in time developed into what we now know as a trust.

Roman law recognised a similar concept that it referred to as the fidei-commissa.^[1]

It has been suggested^[2] that the crusaders adapted the concept from the Islamic waqf.