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Taliaferro v. Taliaferro, 260 Kan. 573, 921 P.2d 803

Facts

Will C. Taliaferro executed two revocable trust indentures, a will, and various other documents while in the hospital. The second trust, the Will C. Taliaferro Trust, was intended to hold various properties, including stocks and personal belongings. After Taliaferro's death, his wife, Betty Taliaferro, contested the validity of the trust, arguing that he had not transferred any property into it. The trial court initially found the trust invalid, leading to the appeal.

On March 29, 1990, while in the hospital, Will C. Taliaferro executed two revocable trust indentures, a will, and various other documents. The trust documents had been prepared by his nephew, an attorney, who had little estate planning experience. The first trust was called the Taliaferro & Browne Trust. It covered the ownership of Will C. Taliaferro's business venture, the Taliaferro & Browne, Inc., engineering firm, and the proceeds of a life insurance policy on his life. This Taliaferro & Browne Trust was the subject of our decision in Taliaferro v. Taliaferro, 252 Kan. 192, 843 P.2d 240 (1992).

Issue

Whether the Will C. Taliaferro Trust was valid despite the settlor's failure to transfer legal title of the property to himself as trustee.

Whether the Will C. Taliaferro Trust was valid despite the settlor's failure to transfer legal title of the property to himself as trustee.

Rule

An express trust requires (1) an explicit declaration and intention to create a trust; (2) the transfer of lawful and definite property by a capable person; and (3) the requirement to hold the property as trustee for the benefit of a cestui que trust.

An express trust has three requisite features; namely: (1) an explicit declaration and intention to create a trust; (2) the transfer of lawful and definite property by a person capable of making transfer thereof; and (3) a requirement to hold the property as trustee for the benefit of a cestui que trust with directions as to the manner in which the trust funds are to be applied.

Analysis

The court determined that the declaration of trust itself was sufficient to establish the settlor's intent to create a trust, regardless of whether legal title was transferred. It emphasized that the settlor's subsequent actions were irrelevant to the initial intent to create the trust. The court also noted that a trust can exist even when the settlor is both trustee and life beneficiary, negating the need for a formal transfer of title.

The trial court explicitly based its final judgment that the Will C. Taliaferro Trust was invalid on its finding that Will C. Taliaferro made 'no present and irrevocable transfer of title of any of the property mentioned in Schedule A of the Trust Declaration.' Appellants attack both the factual basis for the trial court's conclusion and argue the court made erroneous conclusions of law.

Conclusion

The Supreme Court reversed the trial court's decision, holding that the Will C. Taliaferro Trust was valid as the declaration of trust established the settlor's intent to create a trust without the need for a transfer of legal title.

We hold that Will C. Taliaferro clearly declared himself as trustee of the property described in schedule A, which was attached to and made a part of the trust document. No further document transferring title to the property was required.

Who won?

Proponents of the Will C. Taliaferro Trust prevailed because the Supreme Court found that the declaration of trust was sufficient to establish the trust's validity.

The Supreme Court reversed the trial court's decision, holding that the Will C. Taliaferro Trust was valid as the declaration of trust established the settlor's intent to create a trust without the need for a transfer of legal title.

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