What do you do when you’ve lost a trust? You go back to basics: the elements of a trust, and when all else fails, probate!
A Short Story About a Client Who Lost a Trust
We had a case where a client’s mother (let’s call the mother Betty Smith) had deeded her home into trust in a form “Deed in Trust,” but after she died, no one could find the trust. Had she forgotten to set it up altogether, or was the trust set up but somehow lost to the world? The fact was we had real estate that couldn’t be sold because while we knew who the owner of record was – the trust – we didn’t know who the trustee was, or what authority, if any, they had to sell the property.
Because the deed was a “Deed in Trust” It had some form language in it that helped us out. The Grantor was “Betty Smith, Trustee of the Betty Smith Revocable Trust dated February 1, 2000.” The terms of the trust in the deed were as follows:
- Full power and authority are hereby granted to said trustee to contract to sell… to convey either with or without consideration… at any time or times hereafter… and to deal with said property and every part thereof in all other ways and for such considerations as it would be lawful for any person owning the same to deal with.
So apparently the deed created a trust and gave the trustee the authority to convey the property. Without a trustee, we can just look to the Illinois Trust Code, which gives courts jurisdiction to appoint a trustee when the office is vacant (760 ILCS 3/704(c)).
To be a valid trust in Illinois, a trust requires the following elements: “grantor or settlor and a grantee or trustee, subject matter or property, beneficiaries, and specifications of the nature and quantity of their interest and manner and time in which trust is to be performed.” Wynekoop v. Wynekoop, 407 Ill. 219, 95 N.E.2d 457 (1950)
Betty Smith’s trust was one element short of a trust: there was no beneficiary. Without a beneficiary, the entire conveyance failed.
We solved the problem by opening a probate estate for Betty Smith and conveying the property to her heirs at law. We worked with a title company before opening the probate to make sure any conveyance out of the estate would be insurable.
The moral of the story is where a trust is lost, any conveyance to that trust is likely a failed conveyance, and you will have to probate the property instead.