| Court: | WI Court of Appeals |
| Facts: | Phyllis & James had been married for a while, when they purchased
a cottage on Lake Geneva. The title was in her name, but he
contributed to downpayment, mortgage, taxes, and upkeep. She
transfers title in the house, via quit-claim deed, to a trust
she has set up for her kids. She retains control of it, and
right of assignment, but the idea is that when she dies, it
will pass in equal shares to her childen. In order to satisfy
the form of having the trustee have some control over
the property, she has the bank that manages the trust supervise
the property tax payments.
Then, she dies intestate. |
| Posture: | James files suit to have the trust quashed. This is apparently an appeal from that, but we don't know by whom. |
| Issue: | Is this a valid living trust (kids win) or an attempted testamentary gift (James wins)? |
| Holding: | Trust. |
| Rule: | Wis. Stat. § 701.07 defines living trusts, and § 701.03 abolishes passive trusts (i.e., merely nominal power given to the trustee). The statute says that "administration" is key to the formation of a valid living trust, and that means the bank was a trustee. It's a living trust, by the way, if the settlor is still alive. |
| Reasoning: | You can have living trusts (things placed in trust when you are alive), or testamentary trusts (things placed in trust by your will, when you die). In either case, the settlor must give the trustee some power, or else it's a passive trust, which are problemativ because they can be used to disguise the ownership of peoperty, and because they don't protect the equitable interests of the beneficiaries (because the trustee is powerless to work on their behalf). What kind of power is needed? Administration. We declare that this is that. And we're pretty sure the bank would have taken on a greater role, if she had died earlier. |
| Dicta: | |