582-596

Report
Requirements for creating
a trust




Settlor’s intent to create a trust
Presence of a res (the trust property)
Designation of beneficiaries (continued)
A writing or clear and convincing evidence
of an oral trust
 Indiana requires a writing for all trusts, and all
states require a writing for testamentary trusts
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The requirement of trust
beneficiaries
 A trust must have one or more ascertainable
beneficiaries—if we can’t identify the
beneficiaries, the trust will fail—there must be
someone to whom the trust owes fiduciary duties
and who can call the trustee to account


Charitable trusts need not have ascertainable
beneficiaries
Trusts for one’s descendants may have currently
unascertainable beneficiaries when the trusts are
created
2
In re Searight’s Estate,
In re Searight’s
Estate
95 N.E.2d 779 (Ohio App. 1950), p. 582
George
Searight
“$1000 to be
used…to pay
Florence…for the
keep and care of
my dog as long
as it shall live.”
Executor/Trustee
“I give and
bequeath my
dog, Trixie…”
Florence
Hand
3
Can a dog be a beneficiary
of a trust?


We know from Russell (page 359), that you can’t
leave property in a will to a dog
Would it have been a problem if George had created
a trust for the benefit of dogs in general?


No, he could have created a charitable trust for dogs
(page 583, top)
The problem here is that George designated a
particular dog, so we have a private trust, and we
don’t have a beneficiary who can enforce the terms
of the trust
4
Can a dog be a beneficiary
of a trust?

The court permitted the bequest, treating it, like
other courts, as an “honorary trust” (page 583)


Such trusts are valid as long as the “trustee” is willing to
carry out the terms of the bequest (hence the term
honorary). (The court also said that it could be called a
gift with a power (page 583).)
Note that while Trixie was not in a position to
enforce the trust, the residuary beneficiaries of the
will have some ability to do so since they can seek
reversion of the trust if the trustee neglects the
responsibilities of the trust.
5
Trusts for noncharitable
purposes, p. 586
Honorary Trust
Transferee is not obligated
to carry out settlor’s purpose
 If transferee declines, she
holds the property on
resulting trust and property
reverts to settlor or settlor’s
successors
 Used in Searight’s Estate

Statutory Purpose Trust
Statutory trust for pet animal
or other noncharitable purpose
 Authorized by UTC §§408409 and UPC §2-907
 Typically authorize court to
reduce excessive trust property
and provide for enforcement
by settlor or court appointee

Ind. Code § 30-4-2-18
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Requirements for creating
a trust




Settlor’s intent to create a trust
Presence of a res (the trust property)
Designation of beneficiaries
A writing or clear and convincing evidence
of an oral trust
 Indiana requires a writing for all trusts, and all
states require a writing for testamentary trusts
7
Requirement for a writing

Generally, a writing is not required, except
for testamentary trusts or trusts of land


Clear and convincing evidence required to
validate oral trust
But in Indiana, “a trust in either real or
personal property is enforceable only if there
is written evidence of its terms bearing the
signature of the settlor or the settlor's
authorized agent.”

Ind. Code §30-4-2-1(a)
8
Estate of Fournier
Estate of
Fournier
(Slide 1)
902 A.2d 852 (Me. 2006), p. 589
Faustina
Fogarty
Juanita
Flanigan
Rose
??
??
Curtis
King
George
Fournier
$400,000 in trust
for Fogarty
Josephat
Madore
Yvette
Madore
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Estate of Fournier,
Estate of
Fournier
(Slide 2)
902 A.2d 852 (Me. 2006) (2)
Fournier asks Madores to
hold $400,000 in secret,
to be delivered upon his
death to Fogarty because
she “needed it more”
than his other sister.
Note discovered with instructions
Fournier dies testate. that $400,000 be divided among
Fogarty, Flanigan and King. Court
Residue in equal
holds oral trust was for benefit of
shares to Fogarty,
all three residuary takers.
Flanigan, and King.
2002
1998 or 1999
Fournier tells Flanigan
of arrangement with
Madores.
2005
Fournier gives
Fogarty a gift
of $100,000.
Madores give $400,000 to
Fogarty. Court finds oral trust
of money for her benefit.
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Fournier


Note that the probate court weighed the conflicting
testimony and found no trust, while the supreme
court resolved the inconsistency in favor of a trust
Why did the supreme court override the probate
court?


Maybe because Flanigan had an incentive to
misremember/mislead while the Madores did not
In the end, the trust’s beneficiaries turned out to
the same as the will’s beneficiaries. Why did
Fournier bother with the trust?

Trying to evade taxes?
11
Olliffe v. Wells
Olliffe v. Wells
130 Mass. 221 (1881), p. 593
Semisecret Trust
Desire to create trust
appears on the face of
the will
 Terms are undisclosed
 Extrinsic evidence not
needed to prevent unjust
enrichment
 Devise is unenforceable

Secret Trust
Devise is absolute on
the face of the will
 Extrinsic evidence
necessary to prevent
unjust enrichment
 Court will impose a
constructive trust on
promisor

But Restatement would treat semisecret trusts like secret trusts
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