In Goytizolo vs. Moore, Trudy Moore (hereinafter, “Trudy”) bought a Southbury property in 1955. Two months later, Trudy conveyed this property to her mother in trust for Trudy’s minor daughter, Lynn. Trudy did not prepare a separate trust agreement.
On June 29, 1973, Trudy’s mother conveyed this same property back to Trudy “in trust for” Lynn. In this deed, however, Trudy’s mother reserved a life use in the property which permitted her to remain on the property for the rest of her life. So, as of June 29, 1973, Trudy held title to the property as trustee for her daughter, Lynn.
Trudy and Lynn had a falling out. On August 12, 1987, Trudy conveyed this property as trustee to her husband, Jesse. Immediately thereafter, Jesse conveyed the property back to Trudy without mentioning the trust for Lynn in the deed of conveyance. Lynn, now an adult, a married woman by the name of Lynn Goytizolo, brought an action in the Superior Court claiming that the strawman deeds from Trudy to Jesse, and from Jesse back to Trudy, were null and void.
The Superior Court determined that the basic elements of a “dry” trust existed in the deed from August of 1955 when Trudy conveyed the property to her mother in trust for Lynn. In reaching its conclusion, the Superior Court noted that Trudy had consistently stated to Lynn over many years, that the property belonged to her; that in 1955 Trudy conveyed the property “in trust” so that her daughter would have security; that until the 1987 conveyance, Trudy had affirmed that this property was held in trust for her daughter; that Trudy testified at trial that she executed the 1955 deed because at the time, she was driving without insurance and could lose the property if she was sued; and that for several years before 1987, Lynn and her husband made repairs to the property costing $40,000 to $50,000.
Having determined that a trust existed, the Superior Court voided both 1987 deeds and ordered Trudy to convey the property to Lynn. On appeal, the Connecticut Appellate Court opined that a trust required three basic elements. First, there must be a trust “res.” In other words, there must be some property that is the subject of the trust. Second, there must be a fiduciary relationship between a trustee and a beneficiary that requires the trustee to deal with the res for the beneficiary’s benefit. Last, there must be a manifestation of an intent to create a trust. Trusts in which no trustee’s duties are considered to be active are “dry” or passive trusts, but they are valid, legal trusts, nonetheless.
Having found that a trust existed, the Court then had to decide whether Trudy had the right to revoke that trust when she executed the 1987 deed. The Court made several findings. First, the Court noted that when Trudy married Jesse, she became insured under his auto liability policy in 1962. She remained insured from that point until 1987 when she conveyed this property to her husband. Although she was insured for that 25-year period, there was no evidence that she intended to revoke the trust. In addition, there was no express reservation of the right to revoke the trust written into the 1955 deed. In fact, the Court found that Trudy hired a lawyer to draft that deed for her. Thus, the Court determined that Trudy could not revoke the trust.
This case demonstrates the ambiguity that can be created when trust language is incorporated into a deed of conveyance. The better practice would have been to create a separate trust agreement and then convey the The situation would have been much clearer and, undoubtedly, litigation could have been avoided. In addition, a mother/daughter relationship might have been preserved. At Cipparone & Zaccaro, we exercise extreme caution when drafting both trusts and deeds of conveyance. If you would like to talk to us about preparing your estate plan and protecting your real estate assets in the most prudent way, please do not hesitate to give us a call.
February 2021, Issue # 30
Mark Pancrazio and Jack Reardon wrote the articles in this edition. No taxpayer can avoid tax penalties based on the advice given in this newsletter. This information is for general purposes only and does not constitute legal advice. For specific questions related to your situation, you should consult a qualified estate planning attorney.
