The equitable shield: the evolution of protection for trusts and the “Blue-and-White Constructive Trust” in Israel

Abstract This article examines the profound transformation that has taken place in Israeli property and trust law over the past three decades: a shift from a rigid, formalistic system grounded in statutory registration of rights to a sophisticated framework of equitable protections. At the heart of this development stands a landmark decision of the Supreme Court, which held that an express trust, even if unregistered, effectively “ring-fences” trust assets against claims by the trustee’s personal creditors and court-appointed receivers seeking to realize them. This article traces the gradual evolution of this protection, rooted in earlier precedents, and analyses the normative and practical implications of the emergence of a uniquely Israeli “equitable shield.”