 |
| I dream that the beneficiary will............ |
People like to be given clear instructions. It can be very frustrating for the recipient if given ambiguous directions because invariably he or she will perform unproductively. Providing clear instructions is not only useful but required when writing a trust.
California law states this requirement as follows "a trust is created only if the settlor properly manifests an intention to create a trust." Prob C § 15201. The logical question to this is, what constitutes an intent to create a trust?
California law does not require particular "magic" words to manifest an intent to create a trust. Rather, a combination of phrases or terms suffices if an intent to create a trust can be deduced from the writing.
Just about any trust, whether attorney-drafted or plucked from the Internet (yeah, bad idea to use one), will have an introductory clause that states that the settlor holds in trust for the benefit of others, certain assets that are listed at the end of the trust, typically referred to as Exhibit A or a Schedule of Assets. This satisfies the requirement of an intent to make a trust.
What becomes problematic is if the person writing the trust does not use definitive or clear language but rather wishful or aspirational language. Hopeful verbiage such as this is known as precatory langauge. This type of language is legally unenforceable. An example of the consequences of using precatory language is the case of Chris Collias. Estate of Collias (1951) 37 C2d 587.
Collias' will read in pertinent part:
"All the rest and residue of my estate, of every kind and description, and wherever situated, I give, devise and bequeath unto my nephew Argirios Collias a resident of Long Beach, California at the time this instrument is signed. It is my desire and wish that my nephew Argirios Collias will give half of my estate to my nearest relative heir in Greece instructing him or her to distribute said half of my estate in equal shares to all my close relatives in Greece."
The problem with Collias' will was that he used the terms "desire" and "wish" in asking Argirios to distribute half of his inheritance to his relatives in Greece. Naturally Collias' relatives asserted that "one half the estate is left to [Argirios] Collias in trust for the use and benefit of the nearest or close relatives of the decedent in Greece." Argirios balked at this assertion and litigation ensured. The California Supreme Court held that Collias' will did not create a testamentary trust because he used precatory language, i.e. he used the terms "desire" and "wish." Thus, Argirios was free to use the inheritance as he wanted and did not have to hold half in trust for his Greek relatives.
Another common example of precatory language is the term "hope." That is, "I hope my beneficiary uses his inheritance for educational purposes rather than a buy-in for a Texas Hold'em tournament in Las Vegas."
