Lux v. Lux - 109 R.I. 592, 288 A.2d 701 (1972)

Rule:

There is no fixed formula as to when a testamentary disposition should be classified as an outright gift or a trust. The result reached depends on the circumstances of each particular case. A trust is created when legal title to property is held by one person for the benefit of another. Such a relationship cannot be created by will unless the beneficiaries of the trust are identifiable. However, no particular words are required to create a testamentary trust. The absence of such words as "trust" or "trustee" is immaterial where the requisite intent of the testator can be found.

Facts:

The testator executed a will that left the residue of her estate to her grandchildren. Any real estate was to be maintained for the benefit of the grandchildren and was not to be sold until the youngest had reached 21 years of age. After proceedings before the trial court plaintiff executor and defendants, guardian, individual, and persons not in being, sought certification of the will for construction and instructions.

Issue:

Under the circumstances, did the testator intend that her real estate be held in trust for the benefit of her grandchildren? 

Answer:

Yes.

Conclusion:

The court held that use of the terms "shall be maintained" and "shall not be sold" was a strong indication of the testator's intent that the property was to be retained and managed by some person for a considerable time in the future for the benefit of her son's children. That was a duty usually associated with a trustee. Unless a contrary intention appeared in the will, or such an appointment was deemed improper or undesirable, the executor was named to the position of trustee. The residuary devise to the grandchildren was a class gift that did not violate the rule against perpetuities. The court invoked the rule that permitted a class to increase in size until the time for distribution. The class closed when the youngest of the then-living grandchildren reached the age of 21. If the will showed no intention on the part of the testator that income be accumulated, income was payable to the beneficiaries as it accrued. The quantum of each share of income received by a grandchild would be reduced as each new member of the class joined his siblings.