In order to have a valid trust, a valid trust needs to meet these requirements:
(1) There needs to be a trustor/grantor/settlor. This is the person that owns the trust property and will be transferring the property into the trust. Under California Probate Code §15200 a trust can be created by the following: (a) the owner of the property declaring him or herself to be holding the property as a trustee, (b) the owner of the property (during his lifetime) transferring the property to another person to hold the property as a trustee, (c) a transfer of property by the owner of the property in a will or other instrument that provides for distribution of property upon the death of the owner to someone else as trustee, (d) exercising the power of appointment of someone else as trustee or (e) an enforceable promise to create a trust.
(2) There needs to be intent to create a trust. You do not accidentally create a trust. The settlor would have to manifest the intent to create the trust in order to be valid. California Probate Code §15201.
(3) There needs to be trust property. The trust does not exist until there is property being transferred into the trust. California Probate Code §15202.
(4) The trust must be created for any valid purpose that is not illegal or against public policy. California Probate Code §15203.5)
There needs to be a beneficiary for a valid trust that is ascertainable with reasonable certainty or described so that a person or class of persons can be determined to have met the description of the beneficiary. If no beneficiary is stated, the trust needs to grant the power to a trustee or another third party to select a beneficiary based on a certain standard or in the discretion of the trustee or third party to choose the beneficiary to have a valid trust. California Probate Code §15205. If all of these requirements are met, you should have a valid trust.
One thing to note: in a valid trust the settlor (person providing the trust property in the trust), trustee (person responsible for making sure the terms of the trust are carried out properly) and beneficiary cannot be the same person. If the settlor, trustee, and beneficiary are the same person the trust is invalidated or terminated. Two out of the three roles can be the same person (for example: the settlor and trustee is the same person with a different person as the beneficiary or trustee and beneficiary is the same person with the settlor being a different person) and you will have a valid trust. One way around this issue can be having the same person be all three roles BUT have the valid trust provide for one or more successor beneficiaries upon the death of the settlor. California Probate Code §15209. For more information about what makes a valid trust and requirements for a valid trust please contact our estate planning attorneys.
