Talk:Trust (law)

I think my decision to move this page deserves some justification.

This article may be - indeed appears to be - good in terms of content: but if it is, it is good only with regard to the USA's legal systems. Much of the content is wrong in the context of trust law more directly based on the "English model", as it applies in England and Wales, the Isle of Man, Channel Islands, Bermuda, Canada, (some of) the Caribbean, (some of) the Pacific Islands, Australia and New Zealand - as well as several civil law nations with statutory trusts laws.

This difficulty asserts itself from the very first sentence, where trusts are conceived as a branch of contract law.

I felt that any attempt to reconcile the two legal systems in one article was doomed to failure, and would only lead to understandable disputes with the existing authors. My solution is to move the existing Trusts (property) to Trust (Law) USA and to create the new page Trust (Law) non-USA (a title which might itself promote some debate, there) to deal with trusts in the English-model jurisdictions.

I will make the obvious amendments on Trust (disambiguation), and in the first sentence of this article. I do not intend to make any further amendment on this page. AndyJones 19:27, 10 September 2005 (UTC)[reply]

Complete re-write necessary

This article needs a complete rewrite. Recently, an anon added a lot of information to the introduction of the article which needs to be incorporated into the remaining context of the article itself. The information does not seem to be copyvio, but should be checked nonetheless. I lack the knowledge on this subject to combine these sections effectively, but if someone else who has a bit more of an idea about this could, then that would be much appreciated. --tomf688^{talk} 23:21, 5 October 2005 (UTC)[reply]

it could certainly use better section/sub-section organization

I believe I am the anon (didn't know there was another way to do this!) and I couldn't agree more. All this information comes from nearly 30 years in the business. I am not an attorney and my intended audience is the educated layman who wants to learn the basics rather than get a law school board prep.

Revocable testamentary trust

Would someone mind providing a cite or discussion re the possibility of creating a revocable testamentary trust? I am skeptical that this is possible but am willing to be educated.

gbroiles 09:05, 9 January 2006 (UTC)[reply]

Here's your answer: the testator/settlor simply writes a clause into testamentary trust allowing one or more persons the right to withdraw all the assets at any time. I've seen this in Indiana documents at least twice. Such trusts are treated as grantor trusts for tax purposes even though they are testamentary. This brings up what should be an obvious point but is frequently missed: It makes not a whit of difference whether a trust was created inter vivos or by testatment. The administrator must still read the document and see what it says. One should be careful to not assume a testamentary trust is ipso facto irrevocable. Unfortunately, this assumption is made by many practitioners without reading the document. Indeed, most software (SEI for example) simiply assumes all trusts under will are irrevocable. [note above comment from user at address 68.58.58.82 on 20 Feb. 2006]

Dear fellow editors: We have a terminology problem here. A clause in a testamentary trust allowing one or more persons the right to withdraw all the assets at any time would not be a "revocable" trust merely on that basis. By definition, "revocation" can be done only by the testator (not "testor"), and only prior to death (by revoking the will, basically, or at least revoking the part of the will dealing with the trust). By definition, a testamentary trust does not arise until the testator dies. After the testator is dead, he or she is in no position to revoke anything. And termination of the trust by having one or more persons withdrawing all the assets (i.e., after the testator has died) is not a "revocation" of the trust. The reason that most practitioners make the assumption that a testamentary trust is ipso facto irrevocable (i.e., irrevocable after the testator dies) is that they are legally correct. Once the testator has died, the trust is "irrevocable" -- by definition. Before the testator dies, the WILL can be revoked, so that the trust never comes into existence.

On a somewhat tangential note, if a testator allows a particular putative beneficiary to take a bequest, etc., prior to the testator's death (for example, in lieu of part of the property that would otherwise indirectly go to the recipient by or through the testamentary trust after death), then the item transferred wasn't really transferred by trust at all. Again, by law a testamentary trust cannot come into existence until the testator dies, and the trust itself technically cannot be "revoked" until it comes into existence. Yours, Famspear 00:06, 21 February 2006 (UTC)[reply]

Dear fellow editors: The following language:

Practitioners should be careful: It is possible to title a trust with, for example, the word IRREVOCABLE, and not change the title at such time as it becomes revocable due to age attainment of a beneficiary or due to some other contingency.

was deleted. Again, the "practitioners" are generally correct, and the editor (at IP address 68.58.58.82) who inserted this language is, as a general proposition, incorrect. We need to use legal terminology correctly. A trust does not become "revocable" because a beneficiary attains a certain age, for example. A trust might "terminate" for that reason, but it would not be "revoked" for that reason.

The only way I can think of off hand that a trust could be "revoked" in this situation would be where the testator set up a trust for himself (for example, with someone else as trustee), say at age 21, with a provision that says that he himself could not revoke the trust until he reached, say, age 30. That's a highly unlikely scenario, and I don't think that's what my fellow editor intended. "Revocation" is one way to "terminate" a trust -- but "revocation" can be done only by the creator of the trust. Termination of a trust according to its terms, such as the age attainment of a beneficiary or some other contingency, is generally not considered a "revocation." Yours, Famspear 00:17, 21 February 2006 (UTC)[reply]

Dear fellow editors: From a fiduciary tax perspective the ability to remove any or all funds at will makes the trust a grantor trust for tax purposes and all grantor trusts (as defined in fiduciary tax law) are revocable. Arguing that a testamentary trust can never be revoked, because the settlor has died, misses the practical point. It seems entirely defensible to call a testamentary trust that can be terminated at the will of a beneficiary a revocable trust. Indeed, practitioners (lawyers and trust officers) typically refer to such testamentary trusts as revocable. Isn't a revocable trust one that can be terminated at the will of a beneficiary?

Moving on: I find the following statement

            "By definition, "revocation" can be done only by the testator...."

remarkable. This gets to the heart of the matter: Revocation is not an right exclusive to the settlor. It is a right retained in most but not all cases by the settlor, and granted in some cases to one or more other beneficiaries. While a settlor is often his own beneficiary (in the case of a full-service inter vivos trust created for money management and typical fiduciary services during lifetime), he/she is no different than any other beneficiary having the right to terminate a trust. If someone can terminate a trust, then the trust is revocable -- whether or not the settlor is alive and has retained that right. Fellow editor's "by definition" language simply doesn't fly in my 30 years experience. Try saying out loud with a straight face in the offices of any serious corporate fiduciary organization or law firm that a testamentary trust which happens to be a grantor trust for tax purposes is not thereby revocable and you will see what I'm talking about.

And, finally, I agree with fellow editor that a trust that is about to close due to age attainment payouts need not change it's name to revocable or be considered as such. However, if a beneficiary due to age attainment or other reasons (such as satisfaction of a condition such as having a child) now has a right to pull out the assets and does not do so, a wise trust officer will do well to put the word "revocable" into the title. The reason: the trust has now become a grantor trust (a beneficiary has the right to take all the assets at any time) and all grantor trusts (for tax purposes) are ipso facto revocable. Again, revocability is not a function of the state of being of the settlor but rather of the rights of the beneficiaries.

Note: the right of a beneficiary to fire the trustee and substitute another does NOT make the trust revocable.

Trust law and "contractual"

I have edited out the word "contractual" at the beginning of the article. I would argue that trust law is more fundamentally a species of property law, not contract law. That is, the beneficiary's relationship to the trustee is one of privity of estate, not privity of contract. There is arguably a contractual relationship between the trustor and the trustee, of course, so maybe I'm all wet -- and it's been a long time since I read the leading cases on trust law. I realize I'm splitting hairs here. Anybody have any thoughts? Famspear 22:14, 23 January 2006 (UTC)[reply]

I am not burdened with having a law degree, but I did learn the business from a law professor and he always spoke of the contractural relationship between the grantor and the trustee. So did the law texts I used when I cut my teeth as a trust officer. Yes, you may be splittine hairs as a final ruling by the Law Gods would have no affect on how I handle about 135 trusts. I do appreciate however that trust law is an odd bird generating such questions.

Modifications to article on 23 January 2006

Dear fellow editors: I made lots of organizational (and a few substantive) changes to the main article on 23 January 2006. However, the article still needs work. Hhheelllppppp! Just kidding -- actually I would argue that those who have already contributed the substance of this article have done a very good job! Maybe it mostly needs some more fine tuning? Famspear 00:14, 24 January 2006 (UTC)[reply]

For one, it needs a new name that's actually consistent with other Wikipedia articles as well as the Manual of Style. I would use Trust (American law) or Trust (United States). But trust law is a low priority for me (I don't practice it and I didn't find it very interesting when I studied it in law school) so I'll leave it to you to fix the title if you wish. --Coolcaesar 08:07, 17 February 2006 (UTC)[reply]