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Old 05-21-2013, 2:34 PM
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Tincon Tincon is offline
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Default Not legal advice, but just my thoughts...

Quote:
Originally Posted by guntrust View Post
The question here is whether the subsequent transfer into trust (from husband and wife, to husband and wife as trustees) must go through an FFL, or whether an exception applies.
I'm not so sure that is the issue at all. I think the issue is instead whether s27545 applies to this type of "transfer" at all.

First, I don't think the trust is a "party" for the purposes of s27545 or a "person" for the purposes of s28050/s27920.

Quote:
It has long been established under California law that [a trust] is merely a relationship by which one person or entity holds property for the benefit of some other person or entity/ Presta v. Tepper, 102 Cal. Rptr. 3d 12, 15 (Cal. App. 4th Dist. 2009).
Further, if the current owners are the husband and wife (which must be the case if they are community property per California Family Code s760) then there is no transfer if the trustees are still the husband and wife (and of course they are the only "persons" who could actually be receiving the title). So for community property a "transfer" probably is not occurring for the purposes of s27545 if the only trustees are the husband and wife.

Now for separate property it's a bit more interesting. The trustees are the actual "transferees" here, but it is a very limited transfer. There is no transfer of possession, and there is no transfer of equitable title (or "registration"). Really, it's just a transfer of legal title to the property along with equitable duties to deal with the property for the benefit beneficiary of the trust. The transfer is also is from one of the two trustees to both of them. This is certainly less than the normal "complete" transfer contemplated by s27545. And, if we assume s27545 contemplates this type of "transfer" then it actually isn't possible to comply with it (since neither the trust nor both trustees could comply with s28050) so s27545 actually makes illegal this type of trust. I don't think that could reasonably be considered the intent of the legislature here. Instead, I think "transfer" in s27545 only applies to equitable or possessory "transfers", but not trusts. There are parallels in other areas of the law (tax for example).

Also of note:
Quote:
California–Nevada Annual Conference of the United Methodist Church v. St. Luke's United Methodist Church (2004) 121 Cal.App.4th 754, 767, 17 Cal.Rptr.3d 442: “A trust is ‘a fiduciary relationship with respect to property, subjecting the person by whom the title to the property is held to equitable duties to deal with the property for the benefit of another person, which arises as a result of a manifestation of an intention to create it.’ (Rest.2d Trusts, 2, p. 6.) ‘A trust is created by a manifestation of intention of the settlor to create a trust, trust property, a lawful trust purpose, and an identifiable beneficiary.’ (Chang v. Redding Bank of Commerce (1994) 29 Cal.App.4th 673, 684[, 35 Cal.Rptr.2d 64].)” Probate Code section 15200 provides several different methods of creating such a trust, including “(a) A declaration by the owner of property that the owner holds the property as trustee. [] (b) A transfer of property by the owner during the owner's lifetime to another person as trustee. [] (c) A transfer of property by the owner, by will or by other instrument taking effect upon the death of the owner, to another person as trustee.”34 Most importantly for our purposes, “an ordinary express trust is not an entity separate from its trustees.... ” (Powers v. Ashton (1975) 45 Cal.App.3d 783, 787, 119 Cal.Rptr. 729, italics added.) “In contrast to a corporation which is a ‘ “... distinct legal entity separate from its stockholder and from its officers” [citation]’ (Merco Constr. Engineers, Inc. v. Municipal Court [ (1978) ] 21 Cal.3d [724,] 729[, 147 Cal.Rptr. 631, 581 P.2d 636] ) and deemed a person within many legal constructs (Code Civ. Proc., 17), a ‘... trust is not a person but rather “a fiduciary relationship with respect to property.” [Citations.] Indeed, “ ‘ “an ordinary express trust is not an entity separate from its trustees” ’ ‘[citation].’ (Moeller v. Superior Court (1997) 16 Cal.4th 1124, 1132, fn. 3[, 69 Cal.Rptr.2d 317, 947 P.2d 279], italics added; Pillsbury v. Karmgard (1994) 22 Cal.App.4th 743, 753[, 27 Cal.Rptr.2d 491]; see also Evid.Code, 951.)” (Ziegler v. Nickel (1998) 64 Cal.App.4th 545, 548, 75 Cal.Rptr.2d 312.)5 It is for this reason that a trust itself can neither sue nor be sued in its own name. Instead, the real party in interest in litigation involving a trust is always the trustee. (Powers v. Ashton, supra, 45 Cal.App.3d at p. 787, 119 Cal.Rptr. 729; Code Civ. Proc., 369.)
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