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Trusts • Creation of Trusts
TRUSTS#008
Legal Definition
In an inter vivos transfer in trust, a third person is the trustee, and there must be present delivery (plus, if it is for real property, a deed in writing), which can be actual, constructive, or symbolic.
Plain English Explanation
Let's break this down. "Inter vivos" is Latin for "between the living." "Transfer in trust" is a trust that is created by transferring legal title and ownership of property to someone else. Putting these together, an "inter vivos transfer in trust" is a trust created between living people and involves someone either physically handing over property to another person to hold for the benefit of someone else, or doing something that has the effect of handing over the property. If the property is real property (like a house, or land), they must also hand over a written deed.
Hypothetical
Hypo 1: Sam wants to put $100,000 into a trust for his daughter Julie's college tuition. Sam goes to the bank, withdraws the money, and delivers a cashier's check for $100,000 made out to Julie's uncle Bob as trustee. Result: Here, there was actual delivery of the money to Bob, who will serve as trustee. All requirements are met for a valid inter vivos transfer in trust.
Hypo 2: Sam wants to put his house into a trust for his son James. Sam signs a deed transferring the house to James' aunt Sally as trustee. Sally records the deed change with the county. Result: Though there was no physical delivery, recording the deed constructs delivery under the law. All requirements are met.
Hypo 3: Sam signs papers to put his vintage car collection into a trust for his grandson Tyler. The papers name Tyler's friend Zach as trustee. But Sam continues to keep the cars in his garage. Result: There must be actual or constructive delivery of the cars to Zach. Symbolically signing papers is not enough for an inter vivos transfer in trust here.
Hypo 2: Sam wants to put his house into a trust for his son James. Sam signs a deed transferring the house to James' aunt Sally as trustee. Sally records the deed change with the county. Result: Though there was no physical delivery, recording the deed constructs delivery under the law. All requirements are met.
Hypo 3: Sam signs papers to put his vintage car collection into a trust for his grandson Tyler. The papers name Tyler's friend Zach as trustee. But Sam continues to keep the cars in his garage. Result: There must be actual or constructive delivery of the cars to Zach. Symbolically signing papers is not enough for an inter vivos transfer in trust here.
