Craft wrote a letter to
Rippstein. It offered to pay Rippstein $200 a month every month for the
next five years. Craft also said that his estate was bound to make the
payments.
Craft died. Rippstein went to
the Probate Court and asked them to probate the letter as a codicil to Craft's will.
The Probate Court held that
the letter was not a valid testamentary instrument. Rippstein appealed.
The letter didn't meet the
standard for formalities or intentionalities.
The Appellate Court affirmed.
Rippstein went back and sued
the executor of Craft's estate (Unthank) to enforce the letter as a
contract.
The Trial Court found for
Unthank in summary judgment. Rippstein appealed.
The Appellate Court reversed.
Unthank appealed.
The Appellate Court found
that the letter established a voluntary trust under which Craft bound his
property to the extent of the promised payments.
The Texas Supreme Court
reversed the Appellate Court and found for Unthank.
The Texas Supreme Court
found that the plain language of the letter could not be construed to say
that Craft was creating a trust.
If it had been a trust, and
Craft missed a payment, Rippstein would be able to sue him for breach of
fiduciary duty as a trustee and conversion for wrongful possession of
another's property.
The Court also found that
you can't have a trust unless there is money put aside (aka the corpus). The $200 per month needed to come from a
pile of money, and nothing in the will or the letter did anything that
could be construed to have created a corpus.
In theory, Craft would need
to have put aside $200 x 12 x 5 = $12,000 available, and there was no
evidence he had done so.
The Court found that there
are three requirements to create a valid trust:
The words of the testator must be construed as imperative and imposing
on the trustee as obligation.
The subject to which the
obligation relates must be certain.
The person intended to be
the beneficiary under the trust must be certain.
Furthermore, the Court found
that Craft's letter could not be considered a contract because there was
no consideration on Rippstein's part. If anything, the $200 would be
construed as a promise and promises can be rescinded at any time.
The basic rule is that in
order for a trust to be valid, the money in the trust must be
identifiable. The money must be explicitly put aside, it can't be assumed
that money should just be taken from 'somewhere'.
