Wills & Trusts

Fundamental Elements of a Trust - How Do I Recognize A Trust?

Under most state laws, there are four elements which must be present to establish a trust:

  1. There must be an actual or a constructive expression that the Trustor intends to establish a Trust. This expression can be by words or actions or other conduct consistent with the intent to establish a trust;
  2. There must be certain identifiable property which will become Trust Property and this property must be identified as Trust Property in some manner;
  3. There must be an actual designation of the parties to the Trust, which normally includes a Trustor, one or more Trustees, and/or one of more Beneficiaries; and
  4. There must be a valid Trust purpose, which is recognized by the law of your state as a valid purpose. The best example that most professors use is that a trust formed to take care of another person is a valid Trust purpose, while a Trust formed for the purpose of avoiding creditors may not always be a valid Trust purpose.

By finding these four elements in a transaction which appears to have created a Trust, you can determine if a Trust has actually been created. However, often one or more of these items is not explicitly stated, or one item may appear to be missing. State laws and court decisions generally provide guidance in this area and it should be noted that your attorney can be a great source of assistance in determining whether a trust exists. In fact, it is difficult to be conclusive in this area without the benefit of advice and analysis from an experienced attorney.

Also, it must be noted that in order to make the Trust effective, there must be an immediate and present transfer of the property to the actual named Trustee. This means that even if the other four elements are present, the Trust cannot be effective until the Trustor does some act that effectively transfers the trust property, or part of the trust property to the Trustee.

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