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Author Topic: Really random question about trusts  (Read 817 times)

wrhssaxensemble

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Really random question about trusts
« on: October 16, 2008, 08:40:48 AM »
I am working on a paper on business trusts and can't seem to find an answer anywhere to what I would like to know as I work on it... I am taking trusts and estates right now but we are still working on wills issues.... my question is basically, can an individual create a trust in which they are simultaneously settlor, trustee, and beneficiary? and if so, are there any limits on it?

Bizarro Jerry

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Re: Really random question about trusts
« Reply #1 on: October 16, 2008, 05:09:17 PM »
I am working on a paper on business trusts and can't seem to find an answer anywhere to what I would like to know as I work on it... I am taking trusts and estates right now but we are still working on wills issues.... my question is basically, can an individual create a trust in which they are simultaneously settlor, trustee, and beneficiary? and if so, are there any limits on it?

Why would they want to?

It reminds me of concepts of destructibility of contingent remainders through merger... when it all gets vested in the same party, the instrument becomes moot, does it not?

SCOOTERNINJA

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Re: Really random question about trusts
« Reply #2 on: October 16, 2008, 05:19:41 PM »
I agree with a moot instrument and why would that ever happen.  Is there even any legal incentive to create such?

TheReasonableMan

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Re: Really random question about trusts
« Reply #3 on: October 16, 2008, 07:28:09 PM »
When one party is both the trustee and the beneficiary, that person has 100% interest, and the trust ceases to be a trust.  At that point, it's just a fee simple ownership.

jacy85

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Re: Really random question about trusts
« Reply #4 on: October 16, 2008, 08:30:46 PM »
I am working on a paper on business trusts and can't seem to find an answer anywhere to what I would like to know as I work on it... I am taking trusts and estates right now but we are still working on wills issues.... my question is basically, can an individual create a trust in which they are simultaneously settlor, trustee, and beneficiary? and if so, are there any limits on it?

I think in most states, the answer is yes, but only if the settlor/trustee is not the only beneficiary.  If someone else has an interest, then there is some division of ownership.

And I believe (but could be remembering incorrectly) that a few states now allow asset protection trusts, in which the settlor is the trustee and beneficiary, but if someone else seeks to access trust funds (i.e. a creditor), the trust becomes irrevocable.  They're mostly found offshore though, and I'm pretty sure I remember reading some cases where the trust beneficiary was held in contempt of court and jailed indefinitely since they ultimately tried to evade creditors by making their money inaccessible.

wrhssaxensemble

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Re: Really random question about trusts
« Reply #5 on: October 19, 2008, 05:54:14 PM »
I am working on a paper on business trusts and can't seem to find an answer anywhere to what I would like to know as I work on it... I am taking trusts and estates right now but we are still working on wills issues.... my question is basically, can an individual create a trust in which they are simultaneously settlor, trustee, and beneficiary? and if so, are there any limits on it?

Why would they want to?

It reminds me of concepts of destructibility of contingent remainders through merger... when it all gets vested in the same party, the instrument becomes moot, does it not?

From a donative purpose, it makes no sense (except maybe a veiled attempt to escape a wife's elective share with contingent beneficiaries given for the trust for when the settlor/trustee dies) but I am looking at business trusts... in essence, I am arguing that disgusing themselves as being in trust form, the trusts that the progressives rallied against actually combined the partnership and corporate forms and pretended it was in trust to avoid regulation which was then only applicable to partnerships and corporations.... I am having problems though finding a specific course saying individuals cannot create a trust for themselves and set themselves as trustee

jacy85

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Re: Really random question about trusts
« Reply #6 on: October 19, 2008, 07:46:09 PM »
Have you checked a basic treatise or even a case book?  It's a pretty basic rule that an individual, in most states, can't be all 3.  You'd have to look somewhere that covers the basics.

Check your library, and see if there's a Trust and Estate book w/ Jeffery Pennell coauthored, or see if you can flip through a couple of casebooks on the trust intros.

Hope you find what you're looking for!