Intent to Create
No certain words are required to create a trust. Instead, all the creator must do is manifest the intent to create a fiduciary relationship between trustee and beneficiary.
Jimenez v. Lee
547 P.2d 126 (Or. 1976).
Facts
Lee had received a bond of 1,000 from his mother to use in behalf of his daughter’s education (grandma to granddaughter). He had also received another gift from a client with the same purpose.
Analysis
Lee was aware he was holding this money in trust. He was an attorney, knew property transactions, and had acknowledged the transaction as a trust. The question here is whether this was done as a trust or as a custodian. Here, Lee is arguing he was a custodian (giving him more power to control the finances). However, this was a trust.
Also, the money was used inappropriately. A trust must be used for the purpose listed in the trust. Here, the money was not used for his daughter’s education. Instead, it was used to attend ballet concerts and other expenditures related to raising the children.
Additional Notes
Deed of Trust.
This case primarily sets out the difference between custodian and trust. Custodians have more control over the money received to benefit another. The purpose does not have to be the same and does not require the same level of record keeping. On the other hand, a trust is focused on a purpose and requires stingent record keeping and notice.
Hebrew University Ass’n v. Nye
169 A.2d 641 (Conn. 1961) and 223 A.2d 397 (Conn. Super. 1966).
Facts
Professor Yahuda was a distinguished professor with a valuable library. When he died, he gave the library to his wife. During her life, she announced at a luncheon that the Hebrew University would take the library. She began the process of cateloguing the library and preparing it for shipping. She denied several offers for the library, stating she had already given the library to the University. However, no consignment was made and shipping never occurred before her death.
The wife’s will gave most of her estate to a charitable trust foundation. Now, the dispute is between the Hebrew University and the charity over who gets the library.
Analysis
Here, the court determined there was no trust. Although it was her intent to make a gift, she never created a fiduciary duty on herself as a trustee to deliver the books. So, she intended to make a gift but no delivery was made. Unfortunately for the university, this equates as a failed gift.
In the follow up case, the court was presented with a memorandum prepared by the wife and given to the University listing items contained in the library. Delivery of this memorandum acted as constructive delivery (noting the difficulty to ship the library overseas) enough to say this is a gift.
Additional Notes
Declaration of Trust.
A declaration of trust occurs when the trustor declares himself or herself to be the trustee of certain property. In the case above, a trust did not occur because the wife never saw herself as a trustee.
Trust Property
Property in a trust is required to create the trust. This understanding is broad, allowing a trust to be opened to manage a single penny.
Unthank v. Rippstein
386 S.W.2d 134 (Tex. 1964).
Facts
Mr. Craft sent a letter to Ms. Rippstein before his untimely passing. Part of the letter told her he was going to be sending her monthly gifts of 200 dollars for 5 years. The letter also attempted to bind the estate to uphold these gifts. After an unsuccessful lawsuit where the court said this was not a holographic will, Ms. Rippstein attempted to say this letter created a trust.
Analysis
The court denies the argument that the letter created a trust. Although the letter said she was to receive money, there was no specific property listed where the money was to come from. Thus, this letter only provides an intention to give a gift with no property. Thus, a trust is not created.
Additional Notes
The trust property is also called the res. This means there needs to be money available and specifically mentioned as the trust property for a trust to be created.
Ascertainable Beneficiaries
Clark v. Campbell
133 A. 166 (N.H. 1926).
Facts
The testator appointed three trustees and listed property to be included in the trust. The trust then said the trustees were to distribute the property to the testator’s “friends” so they could choose what they wanted, and the residue was to be left to the estate.
Analysis
The intent to create a trust is present, as is the property. The only question then is whether the beneficiaries are ascertainable. Although “relations” can be ascertainable with evidence, there is no statutory basis for the term “friend” as a beneficiary. Thus, the trustees obtain title to the property and hold it in trust to be distributed as the residue of the estate.
Additional Notes
The point of having ascertainable beneficiaries is to resolve any disputes between potential beneficiaries and allows the ascertainable beneficiaries to enforce the trust.
In re Searight’s Estate
95 N.E.2d 779 (Ohio App. 1950).
Facts
The testator left a will and stated his intent that his dog be left to an individual and a trust be created for the care of the animal. The trustee was executor and he was to release 75 cents per day for the care of the animal up to 1000 dollars.
Analysis
A pet is not an ascertainable beneficiary because they cannot protect their interests. However, an honorary trust, if that is what you want to call it, can be done where the trustee distributes the proceeds to honor the trustor’s intent. They are not bound to honor that intent; but if they fail to do so, the money would revert back to the estate (instead of being kept by the trustee).
Here, an honorary trust is created for the care of the animal. The rules against perpetuities is not violated because the trust will be depleated well before the time.
Additional Notes
Honorary Trusts, Pet Trusts, Other Noncharitable Purpose Trusts.
Written
Trusts may be oral, but testamentary trusts need to satify the wills act and other trusts need to satisfy the statute of frauds. That is, trusts ought to be written.
In re Estate of Fournier
902 A.2d 852 (Me. 2006).
Facts
Fournier had two sisters, Fogarty and Flanigan. During his life, Fournier delievered 400,000 dollars to a couple he trusted and told them to hold onto it until his death. At the time of his death, the money would all go to Fogarty (not Flanigan because she was well enough off), who was named as personal representative. This was all oral, and there was no written trust.
Analysis
A trust does not need to be written, so long as there is clear and convincing evidence a trust was created. Here, the testimony of the couple, stating that all the money was to go to Fogarty, was clear and convincing enough to overcome contradicting testimony from Flanigan’s daughter (stating some money was going to her mother). Thus, an oral trust was created and Fogarty is to receive all the money.
Additional Notes
Later, a note was found in Fournier’s home stating the 400,000 was to go to Fogarty, Flanigan, and King equally. Although not signed by Fournier, it was signed by the couple who was holding onto the money. This was enough to overturn the case above.
Resulting Trust
If there is any leftover in the trust (or an express trust failed), then the trustee holds the remainder as a resulting trust for the trustor’s heirs.
