The history of equity and trusts concerns the origin of the body of rules known as Equity, Uses, English trust law and their development into the modern body of trust law that spread with the Common law to the Commonwealth and the United States.
The law of trusts was constructed as part of "Equity", a body of principles that arose in the Courts of Chancery, which sought to correct the strictness of the common law. The trust was an addition to the law of property, in the situation where one person held legal title to property, but the courts decided it was fair, just or "equitable" that this person be compelled to use it for the benefit of another. This recognised a split between legal and beneficial ownership: the legal owner was referred to as a "trustee" (because he was "entrusted" with property) and the beneficial owner was the "beneficiary".
Roman precursors to trusts
Roman law had a well-developed concept analogous to the trust called fideicommissa. These were created by will and enabled a testator to leave property to one person who was obliged to hand it over to another. While they were much older, they only began to create enforceable legal obligations around the time of the beginning of Roman Empire when Claudius charged the Consuls with enforcing fideicommissa, which were previously seen as merely morally binding. They had the advantage that whereas only the testator's heir could be charged with a legacy, legatees themselves could be charged with fideicommissa. They also allowed those would otherwise have been ineligible to inherit (like proscribed persons and foreigners) to inherit from the testator.
These testamentary devices, however, did not develop into the inter vivos (living) trusts which apply while the creator lives and which would develop in England in the Middle Ages that created the basis for the modern English trust.
Medieval origins
Emergence of the Court of Chancery
The origin of the trust has to be traced to medieval England, where a distinction arose between the 'regular "course of the common law" ' and the practices and rulings that the Lord Chancellor gave. This notion of 'regular course' not only derived from Magna Carta, but would, parenthetically, become the broader idea of 'due process of law', but in its original conception it meant only that English subjects were entitled to be dealt and judged according to the English Common Law and that thus, the King could not create new courts that contradicted or opposed the Common Law as developed in the courts of Exchequer, Common Pleas, and King's Bench.
Despite this, the Kings were accepted to retain the right to administer justice in special cases where common law was 'deficient' and the matter in question did not involve 'life, limb or property'. The way this special grace was administered was through a petition to the King. Most of the petitions (also known as 'bills') received no special redress, but in some truly exceptional cases, there would be some special treatment or dispensation which, according to Sir John Baker, can be seen as 'the beginning of newer jurisdictions'. As the number of these petitions grew, it became common for the King to delegate addressing the petitions to either His Council or to a particular official, most commonly, the Lord Chancellor. As it became usual to delegate the petitions to the Lord Chancellor, it became common for petitioners to simply address the Lord Chancellor directly, and not the King, giving rise to the Court of Chancery. This process of petitioning the King also served to create other courts, like the Court of Requests.
Medieval Lords Chancellor tended to be either senior clerics (Bishops and Archbishops) or experienced lawyers. Thus, when asked to deal with petitions asking for some special redress from the common law they did so from their own conscience, often drawing wisdom from Biblical or Philosophical conceptions of what was just in a particular case. It is important to remark that originally they were seen as merely addressing particular cases and could neither affect parties not named in the decrees the Chancellor gave nor change the law. These decrees 'enjoined' the parties to act in a particular way, giving rise to Equity's distinctive remedy: the Injunction. While the Common Law almost invariably awarded money damages, Equity was able to force defendants to act a particular way on penalty of being imprisoned for contempt court.