Law of Wills, 2016A

Moreover, the settlor may use a deed of trust to set up a trust exclusively for the benefit of a third
party. The moment the trust is created the beneficiary becomes the equitable owner of the trust
property, and the trustee becomes the legal owner.
16.6.1 Creation of a Trust
In order to create a valid trust, the settlor must have the intention to do so. Courts may
determine the settlor’s intent by reviewing the language of the trust instrument or relevant extrinsic
evidence. The second requirement the settlor must satisfy is the existence of trust property.
According to courts, any item capable of ownership may serve as the corpus of a trust. For example,
a trust may be named as the beneficiary of a life insurance policy. The proceeds from the policy are
considered to be the corpus of the trust. A valid trust also requires beneficiaries who can keep the
trustee accountable. Even though the inter vivos trust is created during the settlor’s lifetime, the
property is not distributed until after the settlor dies. Therefore, it may be difficult for the court to
determine the testator’s intent.
16.6.1.1. Intent
Frazier v. Hudson, 130 S.W.2d 809 (Ky. Ct. App. 1939)
THOMAS, Justice.
At the time of the transaction here in contest the appellee, A. M. Hudson, defendant below, resided
in Henry County, Kentucky, and was then about 78 years of age. He had succeeded in accumulating
considerable property, composed of both real estate and personalty. His wife had died, and he had
executed deeds dividing his extensive farm among his children-who were married, and, as we gather,
were living on the portions allotted to them, except his daughter, the appellant and plaintiff below,
Mary Lee Frazier, nee Hudson, who was an infant 19 years of age and living with her father. In
making the division of his land plaintiff was deeded 62 acres, but which did not embrace the
residence, and defendant reserved a life interest in that tract for himself, plus a similar reservation in
34 acres of an adjoining allotment to another child, and upon which 34 acres was located the
Hudson residence.
Some four years or more before the filing of this action, plaintiff married one Frazier, and she and
her husband desired a separate residence. To accommodate them defendant purchased another 62
acres and deeded it outright to his daughter, but did not alter in any manner the disposition of his
home place that he had reserved for himself during his life. So that, the total amount of land given
to plaintiff by defendant was and is 62 acres unencumbered by any prior estate, and 62 acres
encumbered by defendant’s life estate-the land being worth, according to the undisputed testimony,
at least $150 per acre-it being, in the language of defendant, “as good land as a crow ever flew over”.
Among the personal property owned by defendant was a number of U. S. Liberty Bonds of $1000
each, and on March 13, 1926, he went to the bank in which the bonds were deposited in a safety box
and after procuring them he, by writing on the back thereof, assigned one of them to each of his
children. The assignment of the one here in contest says: “For value received I assign to Mary Lee
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