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<\/a>\nWhy doesn\u2019t the same result occur with estate planning trusts?\u00a0 We know that real estate trusts have their genesis in real estate law, starting in about 1250 in England.\u00a0 (Other Continental legal systems do not recognize trusts.)<\/p>\n
When one person is simultaneously the grantor, the grantee, and the beneficiary, why don\u2019t the legal interests merge so that the trust is disregarded?\u00a0 That\u2019s an interesting question: a recent case brushes against it, but fails to consider the full impact of this analysis.<\/p>\n
Thus, we find the following discussion in Weinberger v. Morris<\/strong> (2010) 188 Cal.App.4th 1016:<\/p>\n \u201cRobert’s argument implicates the \u2018merger doctrine,\u2019 which may be summarized as follows: when the sole trustee of a trust and the sole beneficiary of the trust become one-and-the-same person, the duties of the person, in his or her role as trustee, and the interests of the person, in his or her role as beneficiary, \u2018merge,\u2019 meaning that the trust terminates as a matter of law, and the trust’s assets irrevocably vest in the beneficiary. (See Ammco Ornamental Iron, Inc. v. Wing<\/em><\/a> (1994) 26 Cal.App.4th 409, 417.)<\/p>\n \u201cThe determination whether the duties of a trustee and the interests of a beneficiary have become united in a single person is a question of law resolved by construction of the trust instrument.\u201d<\/p>\n (Interesting observation by the court of appeal.\u00a0 Why isn\u2019t the legal construction of the document an issue of law to be resolved by the court?<\/em>)<\/p>\n Continued the court.\u00a0 \u201cIn the current case, the trial court rejected Robert’s claims for the following stated reasons: \u2018The Sue Weinberger Trust did not terminate upon Sue Weinberger’s death. The merger doctrine does not apply.\u00a0 In interpreting Sue Weinberger’s intent, as expressed in the Sue Weinberger Trust, the Sue Weinberger Trust continued until there was a final distribution of the assets of the Sue Weinberger Trust \u2026<\/p>\n \u201cUpon Sheila Weinberger’s death the real property continued to remain in the Sue Weinberger Trust and was distributed by Lee Davis acting as trustee of the Sue Weinberger Trust to himself.\u00a0 Upon Lee Davis’ distribution of the real property, the Sue Weinberger Trust terminated.\u201d\u00a0 Based thereon, the court concluded that the trust interests had not merged at an earlier time.<\/p>\n To me, that\u2019s a legal conclusion: it\u2019s not a matter for resolution strictly by factual reference to the decedent\u2019s estate planning trust.\u00a0 The reality is that conventional trust law is applied carelessly in the case of estate planning trusts, because the round peg doesn\u2019t fit the square hole.\u00a0 We advance the fiction of estate planning \u201ctrusts,\u201d with the result that probate administration is avoided.\u00a0 We need a coherent body of law controlling the treatment of estate planning trusts, because the Restatement of Trusts<\/strong> does not fit well.<\/p>\n