Office News: When is a Trust NOT a Trust??

For those of us who practice trust law, there practically is nothing more important than making sure the trusts we draft meet all the legal requirements of a trust. If we omit or improperly draft certain provisions, the client's wishes could go unfulfilled and the trust would fail.

Unfortunately, some clients think they can draft their own trusts, or worse, they simply leave instructions with someone that this or that piece of property should pass to or be held for this or that person "on my death."

Do such intentions ever work? Do they create a trust? Even without a formal writing? After all, it's certainly not unusual for the typical lawyer-drafted trust to go for 19 or 20 or even 50 pages! How could one be set up with just a few words?

The answers to these questions first depend on the type of property that is subject to the trust. If we want to pass real estate by means of a trust, for exampe, there must be a writing, and this has been the law for hundreds of years.

With only special exceptions (e.g. so called constructive or resulting trusts), a trust to hold any interest in real estate must be reflected in a writing identifying the real estate, describing the terms of the trust, and signed by the owner of the real estate or by her representative. And if it is to be recorded in a registry, the owner's (or representatitives's) signature must be acknowledged.

Interestingly, and in stark contrast to trusts for real estate, a trust for personal property (basically, every type of property in the world except interets in real estate) may be established with no writing. How does that work?

In a typical case, a person will express the decision that a certain item of property is to be held for another person at a certain time. But to be legal, a number of things must happen.

For one, the expression must be a direction rather than a wish. Words like "it would be nice for Jerry to have the car when I die" are not enough.

For another, the beneficiary must be made aware of the arrangement unless title to the property is transferred to another trustee (unless you are dealing with a "secret trust". And because there are no written items of the trust, such details must be clearly proven by the beneficiary - a heavy burden where all one might have is the hearsay instructions by the ower.

Mass Lawyer's Weekly (August 17, 2020) News Briefs

Call Alex today if you have any questions or need clarification. 508-660-0331.