Citation. 5 Ill. 2d 417,125 N.E.2d 600,1955 Ill.
Brief Fact Summary. The deceased, Albert B. Farkas, created purchased stock and held it in the form of a trust for a beneficiary, who was entitled to the stock in the event of Farkas’s death. He executed trust declarations at the time of the purchase of each stock. After Farkas died, the circuit court held that the declarations were invalid testamentary dispositions.
Synopsis of Rule of Law. An intervivos trust where the settlor does not retain all of the powers of normal ownership of stock and where the settlor has a fiduciary duty to the beneficiary as the trustee of the trust is valid and not a failed testamentary disposition where the beneficiary takes the trust property upon the settlor’s death, and the trust is executed in a formal manner.
Facts. Farkas purchased stock of Investors Mutual, Inc. At the time of each purchase, he executed a written application directing the company to issue stock in his name “as trustee for Richard J. Williams.” Along with the applications, Farkas signed separate declarations of trust. Farkas retained the power to vote, sell, redeem, and exchange the stock. He also retained the right to change the beneficiary or revoke the trust at any time. Upon his death, the title to the stock was to be vested in the beneficiary. When Farkas died, Williams sought to have the stock directed to him. However the circuit court held that the trust declarations were testamentary in character and were invalid.
Issue. Whether a document is a valid intervivos trust that leaves a testamentary gift to a beneficiary where during the settlor’s lifetime, if he retained the rights to change the beneficiary and vote, sell, redeem, or exchange the stock, if the settlor is also the trustee.