{"id":128,"date":"2009-12-06T11:38:08","date_gmt":"2009-12-06T18:38:08","guid":{"rendered":"http:\/\/fiduciarydutiesblog.com\/?p=128"},"modified":"2009-12-06T11:38:08","modified_gmt":"2009-12-06T18:38:08","slug":"a-revocable-trust-is-not-a-separate-legal-entity-part-1","status":"publish","type":"post","link":"https:\/\/fresnolawyerblog.com\/?p=128","title":{"rendered":"A Revocable Trust Is Not a Separate Legal Entity – Part 1"},"content":{"rendered":"

A pair of decisions from last month reinforce the fundamental rule that an inter-vivos revocable trust is not an entity separate from the trustee.\u00a0 The first opinion, 1680 Property Trust v. Newman Trust<\/em>, 2009 DJDAR 16161 (Nov. 17, 2009) states the rule with elegant simplicity, to wit:<\/p>\n

\u201cUnlike a corporation, a trust is not a legal entity.\u00a0 Legal title to property owned by a trust is held by the trustee.\u00a0 A trust is simply a collection of assets and liabilities.\u00a0 As such, it has no capacity to sue or be sued, or to defend an action.\u201d<\/p>\n

\"CelebrateIn 1680 Property Trust<\/em>, it was alleged that the trustee had made fraudulent statements.\u00a0 The trustee had died more than one year before the lawsuit was filed.\u00a0 California law provides that an action against the decedent must be filed within one year from the date of death.\u00a0 (The one-year rule applies to claims that existed as of the date of death.\u00a0 If the claim arises subsequent to death, then an action can be filed after the general one-year period.)<\/p>\n

To circumvent the application of the one-year rule, plaintiff sought to sue the trust itself.\u00a0 The court held that there were no such claims against the trust, only claims against the trustee.\u00a0 And, because the trustee had died more than one year before the lawsuit was filed, the action was barred.<\/p>\n

Explained that the court, \u201cIt appears that whatever its form, the substance of the claims in this case is for the personal misconduct of the settlor\/trustee on behalf of and for the benefit of the trust, that was completed entirely before the settlor\/trustee died, and for which the settlor\/trustee could have been held personally liable.\u00a0 The action is one that could have been \u2018brought on a liability of the person\u2019 (Code of Civil Procedure section\u00a0 366.2, subd. (a)), and is based \u2018on a debt of the decedent\u2019 even though brought against the successor trustee . . . Section 366.2 was intended to impose a time limit on such claims, regardless of whom the action was brought against.\u00a0 Accordingly, the claims against Newman Trust are barred by section 366.2.\u201d<\/p>\n

Let\u2019s say that again so we all understand it:\u00a0 An estate planning trust is a legal fiction.\u00a0 It is not an entity.\u00a0 Period.\u00a0 The trust has no separate existence, no matter what promises may be peddled by asset-protection salesman.\u00a0 For all intents and purposes, the trust and the trustee are identical.<\/p>\n","protected":false},"excerpt":{"rendered":"

A pair of decisions from last month reinforce the fundamental rule that an inter-vivos revocable trust is not an entity separate from the trustee.\u00a0 The first opinion, 1680 Property Trust v. Newman Trust, 2009 DJDAR 16161 (Nov. 17, 2009) states the rule with elegant simplicity, to wit: \u201cUnlike a corporation, a trust is not a […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,9],"tags":[],"class_list":["post-128","post","type-post","status-publish","format-standard","hentry","category-case-law","category-trusts-and-estates"],"_links":{"self":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/posts\/128"}],"collection":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=128"}],"version-history":[{"count":0,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/posts\/128\/revisions"}],"wp:attachment":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=128"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=128"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=128"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}