Can a revocable trust be created wherein trustor, trustee and beneficiary are one in the same individual/entity?

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Can a revocable trust be created wherein trustor, trustee and beneficiary are one in the same individual/entity?

Asked on August 2, 2010 under Estate Planning, Maine

Answers:

B. B., Member, New Jersey Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

No.  You'd have a complete merger of interests.  The only function of a "trust" like that would be for some sort of evasion or deceit, it serves no real purpose.

The basic characteristic of a trust, or any similar device, is that there is a division of what the law calls the legal and the equitable or beneficial ownership of property.  One person (or entity) serves as the trustee, holding the legal ownership:  if the property is land, the trustee has the authority to change the locks, hire landscapers or repair services, receive the tax bill and pay it, etc.  The trustee might also have the power of sale.  A mutual fund works much the same way, where the fund management company owns the stocks bought with investors' funds.

There are many reasons to divide the legal and beneficial ownership of property.  Not all of those reasons are served well by a trust; there are other legal approaches that also effectively do the same thing, to one extent or another.  But I can say, absolutely, that if there is no division of the legal and beneficial interests in the property, any purported trust is a sham.


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