Source: http://casaly.com/articles/07_matter_of_trust.html
Timestamp: 2019-04-22 18:20:02+00:00

Document:
If there ever was a topic fraught with myths and misconceptions, it is the matter of trusts. Questions concerning the characteristics of a trust, the liability of a trust, the status of the beneficiary and other related issues are the subject of daily inquiry by our agents and approved attorneys. And, understandably so. The subject is, to say the least, mysterious. Its roots are found in the feudal system of medieval England and its history can be traced through the development of the bifurcated English court system of law and equity. Many of the rules that govern modern day trusts emanate from this enigmatic structure of law.
Speaking generally a trust is not a legal personality. With the exception [regarding trusts with transferable shares], it cannot be sued. It is represented by the trustee. He embodies it. He holds title. He deals with the property in which trust rights exist. Contracts with regard to the rights and the property affected by trusts are contracts of the trustee. He, in person, is liable on them. He is not acting as representative or agent of another. He is acting for himself, but with fiduciary obligations to others. (Citations omitted.) It differs from a corporation or partnership. The former is a legal person. The latter, in the law of Massachusetts, is [not].
Save for the purpose of being sued, the trust [here], as distinguished from the trustee, is not made a separate entity; and only the particular trusts organized under a written instrument with beneficial interests divided into transferable shares are suable at law.
At law, the official and individual capacities of a trustee are not separated. A trustee simply owns the property subject to such equitable rights of the cestui as may exist.
Another misconception exists concerning the matter of the termination of a trust. The termination of a trust does not mean that the trustee is powerless thereafter to act. As a matter of fact, it is the point in the duration of the trust where the trustee must act. Termination requires the trustee to wrap up the affairs of the trust and to make distributions to those entitled thereto. This is an important point because, unless the trust otherwise specifically provides, the title to the trust property remains vested in the trustee and does not vest in the beneficiaries until such distribution actually is made. See Rothwell v. Rothwell, 283 Mass. 563, 186 N.E. 662 (1933). Whether title must be distributed in kind to the beneficiaries or whether the trustee is empowered to liquidate the trust res and distribute the proceeds will depend upon the wording of the trust, but the point is that the trustee retains the title until distribution or liquidation occurs. The trust does not truly terminate until this is done. See Franklin Foundation v. Attorney General, 416 Mass, 483, 623 N.E.2d 1109 (1993). This is true notwithstanding the Statute of Uses, which would otherwise "execute" the "dry" trust, inasmuch as the very obligation to convey is sufficient to keep the trust an active one. Dakin v. Savage, 172 Mass. 23, 51 N.E. 186 (1898).
If the beneficiaries all consent and none of them is under an incapacity, it is held in England that they can at any time terminate the trust, since they have the whole beneficial interest in the property. In the United States, however, they cannot insist on the termination of the trust if its continuance is necessary to carry out a material purpose of the settlor. American courts are unwilling to permit the termination of a trust if this would defeat the purpose of the settlor in creating the trust, even though all the beneficiaries wish to terminate it.
The relationships between acting trustees and between the trustee and himself or herself individually is important to consider. Unless the trust otherwise provides, the trustees must act in concert and unanimously. See Chapin v. First Universalist Society, 8 Gray 580 (1857). Although prohibited from delegating discretionary powers, such as the authority to enter into contracts to sell real estate, they are, nonetheless, empowered to delegate ministerial acts, such as executing a deed. See Morville v. Fowle, 144 Mass. 109, 10 N.E. 766; Boston v. Curley, 276 Mass. 549, 177 N.E. 557. But they are prohibited from engaging in self-dealing, although the beneficiaries' remedies in such a case may depend upon whether a good faith purchaser has intervened. See Fratcher, Scott on Trusts, Little, Brown & Company (Fourth Edition, 1989), §§170.2, 170.9.
The power of a trustee to act is important to establish. Generally, the powers are enumerated at length in the instrument. However, sometimes the authority is camouflaged in verbiage. For example, although the trustee may not have been empowered in so many words to sell property, if the trust instrument vests the trustee with the authority to "invest and reinvest," "manage and invest" or simply "invest," this will be deemed to include the power to sell real estate. See Boston Safe Deposit & Trust Co. v. Mixter, 146 Mass. 100, 15 N.E. 141 (1888); Harvard College v. Weld, 159 Mass. 114, 34 N.E. 175 (1893). Although at common law it was necessary for the purchaser to see to the application of the proceeds received by a trustee, that is no longer the case. See G.L.c. 203, §20.
1. When one executes a deed as trustee, or as executor, or in any other fiduciary capacity, the fact that he so executes it should be stated in the body of the deed, and, if so stated there, there is no occasion for the addition of the word"trustee," or other similar word, to his signature or to the mention of his name in the certificate of acknowledgment. Swaim, Crocker's Notes on Common Forms (Seventh Edition); §354.
2. When one acknowledges a deed which he has executed in a representative capacity (for instance as "trustee" or "executor") there is no reason for inserting any reference to that fact in the certificate of acknowledgment, but it is still usual to do so." Id, §398.
One last point, and that has to do with the Rule Against Perpetuities and its relationship to trusts. It is generally assumed by conveyancers that a trust with a term in excess of a life in being plus twenty-one years (now ninety years, effective as of 1990) is violative of the Rule. But the Rule Against Perpetuities does not govern the duration of the term of a trust. Rather, it governs the time during which interests under the trust remain unvested. If the equitable interests under the trust are vested at all times then the term of the trust is irrelevant. For example, a trust to pay the income to A for life and after his death to his children for their lives and on the death of the survivor of the children to pay the principal to the X Church will not violate the Rule, even though some (or all) of A's children are unborn at the time of the creation of the trust because at any moment in time all equitable interests will be vested.

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