Monday, November 11, 2013

Farkas v. Williams case brief

Farkas v. Williams case brief summary
125 N.E.2d 600 (1955)


CASE SYNOPSIS
Defendant beneficiary appealed a ruling of the Third Division of the Appellate Court for the First District (Illinois), which affirmed a trial court ruling in favor of plaintiff heirs on their suit to establish that an alleged inter vivos trust in favor of the beneficiary was, in reality, invalid as a will executed without formalities.

CASE FACTS

A settlor who had worked as a veterinarian created an inter vivos trust in favor of a beneficiary, who was his employee. The settlor, as trustee, purchased shares of stock on four occasions, executing four trust agreements. The settlor retained the rights to collect the stock's dividends, vote the stock, sell the stock, and terminate the trust. The trust also required that the beneficiary outlive the settlor, which he did.

DISCUSSION

  • The court on appeal found that the inter vivos trust was valid, first, because the beneficiary acquired an immediate, although undefined, interest in the trust at its creation. 
  • Next, the court found that the settlor's retained powers were not so substantial as to invalidate the trust. 
  • The court so found because the settlor, as trustee, was required to act in the beneficiary's best interests, rather than his own. 
  • The court found that the power to revoke the trust similarly did not render it testamentary in character. 
  • The court held that each of the contingencies was merely a condition subsequent that could have defeated the beneficiary's interest but, because each went unexercised, vesting of equitable title in the beneficiary was not prevented.

CONCLUSION
The court reversed the judgment upholding the decision in favor of the heirs and remanded for entry of judgment in favor of the beneficiary.


Suggested Study Aids For Wills, Trusts & Estate Law

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