General Assignments Effectively Transfer Shares of Stock to a Trust

Recall that in order to ensure the creation of a valid trust, there must be trust property.  See Ensuring the Creation of a Valid Trust blog.  Written declarations and general assignments generally are not the best ways to create trust property; however, they can be sufficient to transfer shares of stock, but not real property, to a trust, according to a recent California Appellate case.

In Kucker v. Kucker, 192 Cal. App. 4th 90 (2011), Trustor signed a declaration creating a revocable inter vivos trust, a general property assignment, and a pour-over will.  Later, Trustor signed an amendment to the general property assignment transferring all of her shares of stock in eleven specified corporations and funds.  However, Trustor did not include her 3,017 shares of stock in Medco Health Solutions, Inc.  At the time the amendment was signed, the Medco stock certificate was lost and the issue before the court became whether the Trustor intended to include all the stock she owned when she amended the general assignment.

The lower court denied the petition to attach the Medco stock for failing to meet the writing requirement under the California Civil Code (which required a writing for contracts that granted credit for over $100,000).  The Second District California Court of Appeal reversed and held that a general assignment of assets was sufficient to transfer shares of stock to a trust, even if the assignment failed to specifically identify the stock.  The court further elucidated that, “There is no California authority invalidating a transfer of shares of stock to a trust because a general assignment of personal property did not identify the shares. Nor should there be.”  The Civil Code section used by the lower court applied to agreements to loan money or extends credit made by persons in the business of loaning money, not to transfers of shares of stock to a trust.

There are many intricacies involved in the creations of trusts, and estate planning in general.  To ensure your affairs are in order, or if you are interested in learning more about how to ensure the validity of your trust, please contact  the San Jose estate planning attorneys at Lonich Patton Ehrlich Policastri, LLP.  Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results.  While this post may include legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.