Four lines of cases over four decades have reached the remarkable result that even though a grantor signed a trust document, apparently creating a trust, that grantor didn’t, in fact, create a trust. How can this be? How can a signed—and perhaps also witnessed, notarized and funded—trust instrument not create a trust? How is any trust safe from assault in light of such rulings?

Fear not. In each of the four lines of cases—from Colorado, Connecticut, Delaware and Massachusetts—despite the existence of an instrument unequivocally stating that a trust had been created, a court found that property wasn’t subject to the terms of the trust because the grantor hadn’t actually intended to create one.1  Reviewing and categorizing the doctrines and evidence supporting these courts’ conclusions yields useful lessons for fiduciaries and advisors.

 

Not Meant to Be

In the family dispute at the heart of Porreca v. Gaglione,2  a Massachusetts father established an irrevocable trust to hold real estate that was later re-conveyed to him to avoid a possible claim from a creditor, a son-in-law, with whom the father had difficulties and litigation. One of his three children was the trustee. The written trust instrument required the trustee to hold the properties for the benefit of his two siblings. On the trust’s termination, the trust property was to be divided equally between the two beneficiaries. The father created the trust, intending to protect the properties from attachment. Within two years of the trust’s creation, the trustee conveyed the realty back to the father, who, years later, conveyed the properties back to the trustee (individually, this time) and the trustee’s wife. Through the remaining 26 years of his life, the father retained control of the realty, collected all rents, paid all bills on the properties and treated the realty as his own.3

After the father died, the two siblings who weren’t trustees asked a court to determine their interests in the trust property. A master found that:

 

the father created the trust instrument in an effort “merely to put the properties in question beyond the reach of a claimant” and never intended to create a valid, binding trust;

 

the father never divested himself of control over the assets and continued to retain possession and control over the assets and their proceeds; and

 

the son who was named as trustee never accepted the trust and never assumed the duties of trustee.

 

The master concluded that the other two children had no interest in the realty or its proceeds.4

On appeal, the non-trustee siblings argued that the master erred in concluding that the trust was invalid because the grantor never intended to create a valid trust. The appellate court accepted the master’s findings as conclusive, as they weren’t on their face plainly wrong, and stated:

 

To prevail the plaintiffs were required to show that they had an interest in the property as beneficiaries of a valid, subsisting trust. But, as the findings of the master make plain, no trust ever came into existence.5

 

The upshot for fiduciaries and advisors two generations later: parol evidence—that is, evidence outside of a trust document itself—can be used to establish an instrument’s validity; or here, whether it was intended by the parties to have a binding effect on them.

The result may seem aberrant, but it’s not a one-off. Continuing the Massachusetts line of cases to this effect, in Ecclesiastes 3:1, Inc. v. Cambridge Sav. Bank,6  the court held that a publicly recorded notice of a 100-year lease had no effect in a later title dispute because the real purpose for recording the notice was to avoid a local rent control ordinance, and the purchaser at foreclosure was granted possession over the claims of an assignee under the lease. While the foreclosure purchaser could well have prevailed under the traditional rules governing secured transactions, the trial judge also permitted evidence, in the form of affidavits from the parties to the purported lease and an attorney involved in the transaction, stating that: (1) the 100-year lease never existed, (2) the notice of lease wasn’t intended to constitute the lease, and (3) the notice was recorded to address concerns about whether the rent control ordinances might affect the buyer’s proposed conversion of the property to cooperative apartments. “A person is competent to testify as to his own intent,” held the Suffolk County Appeals Court, and in a summary judgment proceeding can submit an “affidavit which shows what he did not intend.”7 The court cited Porreca for the proposition that, when a party attempts “not to vary or contradict [the] terms [of an instrument] but, rather, to challenge its very existence,” the parol evidence rule is inapplicable.8

Similarly, parol evidence was admitted in a third Massachusetts case, Fine v. Cohen,9 including testimony from the grantor’s attorney about the grantor’s intent in creating the trust and transferring property to it. The attorney would have testified that the trust was a vehicle to convey appreciated property without immediate tax cost and neither created a traditional trust nor imposed any responsibilities on the named trustees. Under the attorney’s retelling, his client, who was incapacitated by the time of trial, told him he wished to convey his interest in realty without incurring a capital gain. The appellate court directed that this testimony be admitted because it could bear on the determination of whether the trust document actually created binding legal obligations among the parties.10 

 

Revealing Conduct

In the Colorado case, Estate of Daniels, a grantor who executed a trust agreement naming six equal residuary beneficiaries signed a will on the same day naming the trust as the residuary beneficiary. But, the grantor further instructed that, “[i]f the trust created by said agreement is not in effect at my death,” then the residuary beneficiary under her will would be one of the trust’s residuary beneficiaries.11 

Evidence of the grantor’s conduct before and after signing the trust document, as well as other background facts and circumstances, led the trial court to find that she didn’t intend to create a trust. Among this evidence:

 

The primary drafting attorney was married to another of the trust’s six residuary beneficiaries, but didn’t typically handle trust or estate matters. The primary drafter, therefore, engaged another attorney to help draft the trust. The primary drafter even paid for the services of the second attorney, yet the second attorney had no contact with the grantor. The primary drafter advised the grantor that merely signing the trust document wouldn’t “activate” it and that to do so, the grantor would first have to fund the trust and appoint a co-trustee.12 

 

These conversations between the primary drafting lawyer and the grantor “were based on the assumption that the trust did not exist and centered on [the grantor’s] concern over whether a trust should be created.”13

 

The grantor didn’t fill out the property schedules attached to the trust document, so she never funded the trust.14  

 

Though the trust document contained a space for the co-trustee (the lawyer’s wife and grantor’s relative) to sign, the co-trustee never signed it.

 

The grantor gave the trust document to her lawyer “to wait for further directions on it,”15 yet treated the will differently, placing it in her safe deposit box.

 

No evidence was proffered that the grantor ever notified any beneficiaries that the trust existed.

 

The primary drafting lawyer reported that his last conversations with the grantor centered on her decision to “really dissipate her estate prior to her death through gifts” and that she began making significant gifts at this time.16

 

Based on this evidence, the trial court held that the grantor didn’t intend to create a trust. The appeals court reversed, holding that the trust was in effect as a matter of law. The appeals court seemed to assume that the mere execution of the instrument meant that the trust had, in fact, been created, meaning that the central question was whether the trust remained effective on the grantor’s death.

The Colorado Supreme Court, however, reversed the court of appeals, upholding the trial court’s original ruling. The court held that, while the grantor’s signing the trust document “is a very strong outward manifestation of an intent to create the trust,”17 there was sufficient evidence that she didn’t intend to create a trust. In so concluding, the Colorado Supreme Court ruled that extrinsic evidence—that is, evidence other than the trust document—of a grantor’s words and conduct is relevant to whether she intended to create a trust and that when such evidence is offered, it isn’t precluded by the parol evidence rule, even citing Porreca among the authorities for the latter proposition.18 

 

Mum’s the Word 

At issue in Palozie v. Palozie,19 meanwhile, was whether a Connecticut grantor who died intestate intended for an executed trust instrument and deed to govern the disposition of her real property, when there was no evidence the decedent ever disclosed the nature of either document to any third party. After inviting her grandson and his wife to her home, Sophie Palozie signed, and they witnessed, a trust instrument by which she apparently appointed herself trustee to hold her real property for the benefit of her son (the witness’ father), who lived on the property in a trailer. They also witnessed her signature on a quitclaim deed purporting to transfer the real property to herself as trustee. Neither witness understood the nature of these documents, and Sophie didn’t share the existence of the documents or the arrangement with anyone else, locking the documents away in her home to be discovered only after her death. Neither the trust instrument nor the deed was ever recorded. When her personal representatives sought to sell the property in the course of administering Sophie’s estate, her son claimed title to the property by virtue of the purported trust.

The trial court found, and the Connecticut Supreme Court affirmed, that the trust instrument was void and unenforceable and that the personal representatives, thus, had the power to convey the property on behalf of the intestate estate. The premises for this holding included:

 

The burden was on the claimant to prove, “by clear and satisfactory evidence,” that the decedent had created a trust and accepted the enforceable duties of trustee.

 

The terms of the trust were ambiguous, in that the trust purported to be the grantor’s “last verbal act.” The trial court, as well as the high court, determined that this language made it unclear: 

 

whether the decedent intended to create a presently enforceable trust, with all the rights, duties and responsibilities that such a trust entails, or whether she intended to execute a testamentary document, which would become effective and enforceable only after her death.20 

 

This ambiguity allowed for the consideration of parol evidence of the grantor’s intent. 

 

That the decedent never disclosed and retained exclusively the trust instrument and quit-claim deed, led the trial court to find, and the high court to affirm, that she hadn’t manifested the intent to create a trust or to impose upon herself the enforceable duties of a trustee.

 

In reaching its determination that the failure to disclose the trust was evidence of the grantor’s intent not to create a trust, the high court relied on the treatises for the proposition that there’s probative value—meaning the evidence is significant enough for the court to give it weight—in the decision of a would-be grantor not to disclose the existence of a trust to any third party. 21 

 

Hotchpot Plan Goes Awry

Finally and most recently, in Otto v. Gore,22 Delaware grantors decided to create a trust as the capstone to a hotchpot estate plan. After gifting stock to their children, they embarked on creating a trust for their grandchildren that would take family size into account, presuming for purposes of the trust that their grandchildren with fewer siblings stood to inherit larger portions of stock from their parent than their grandchildren with more siblings. The trust would, therefore, leave more stock to grandchildren who had more siblings.

In late 1971 and early 1972, the grantors started to outline the hotchpot plan, created a holding company and placed operating company stock in the holding company. On May 8, 1972, however, they signed a trust instrument that was irrevocable on its face before two witnesses and a notary public (the May Instrument) that neither included the hotchpot plan (instead distributing the corpus outright, per capita) nor kept the stock out of their grandchildrens’ estates. And, although Schedule A of the May Instrument listed all of the shares of the holding company as the trust’s corpus, the grantors didn’t initial the schedule—one important fact among many differentiating this document from 27 other trust instruments the grantors executed before and afterwards.

One day later, one of the grantors wrote to his attorney, further delineating the specific hotchpot formula the grantors wished to use. That process continued throughout the summer and fall of 1972 amidst extensive correspondence between the grantors and their lawyer. On Oct. 16, the grantors signed another trust instrument, also irrevocable on its face, before two witnesses and a notary (the October Instrument). This instrument’s Schedule A listed the same corpus (the holding company’s stock), but this time, the grantors initialed it. From then on, the grantors consistently held out the October Instrument as governing the trust. The May Instrument, meanwhile, was stuck in a long-forgotten family file, emerging only during litigation to the surprise of all family members.  

After extensive efforts by one family branch to undo the effects of the October Instrument’s hotchpot formula, the grantors’ daughter, who headed that branch, in an attempt to increase the number of children she had and effectively nullify the formula, adopted her ex-husband. The adoption wasn’t disclosed outside of that family branch until after the surviving grantor’s death in 2005. Litigation and two trials ensued.23 In the second trial, the Court of Chancery rejected the contention that, despite signing the May Instrument, the grantors hadn’t intended to create the trust until signing the October Instrument. Instead, the Court of Chancery held that, while the May Instrument created a trust, the evidence showed that despite its facial irrevocability, the trust was revocable and remained so until the grantors signed the October Instrument.24

The Delaware Supreme Court affirmed the result in the Court of Chancery, but took a different route in reaching its decision. Chief Justice Myron T. Steele’s unanimous opinion upheld the original argument of the October Instrument’s proponents that the May Instrument didn’t create a trust in the first place, overruling the Court of Chancery’s finding. Reiterating the standard that the proponent of a trust must establish its existence by clear and convincing evidence, the Delaware Supreme Court held that the intention to create a trust is determined by examining both: (1) the intrinsic evidence of the trust instrument’s terms, and (2) the extrinsic evidence of the circumstances of the trust’s creation, including the grantors’ conduct. The court pointed out that, unlike the usual rule barring consideration of extrinsic evidence to construe a trust instrument’s terms, such evidence may be considered to determine whether a grantor intended to create a trust.25 

The Delaware Supreme Court held that, although the intrinsic evidence of the May Instrument itself supported a finding that it created a trust, the cumulative effect of all the extrinsic evidence to the contrary overwhelmed the intrinsic evidence.26 Notably:

 

The grantors never told anyone about the May Instrument. A grantor’s decision not to communicate a trust’s existence had been previously recognized as evidence that the grantor didn’t intend to create a trust.27 

 

The grantors’ long-established trust instrument execution routines spotlighted the May Instrument’s singularity. The grantors followed the same procedures with the October Instrument as they did with the 27 other irrevocable trusts they created, namely: (1) signing the instrument in duplicate; (2) affixing a blue backer; (3) initialing the trust’s schedule designating its corpus; (4) sending a conformed or other copy to their lawyer; and (5) requesting a taxpayer identification number from the Internal Revenue Service. But, they followed none of these procedures with the May Instrument. The significant departure from the grantors’ established pattern of formalities weighed against a finding that the grantors intended to create a trust when they signed the May Instrument.28

 

The grantors’ decision not to initial the corpus schedule of the May Instrument was particularly important, meaning that they never actually funded the trust that the May Instrument supposedly created.29

 

Taking into account one grantor’s written characterization of its terms as a “draft” the day after its execution, the court affirmed the lower court’s finding that the May Instrument was a mere “placeholder,” because, by definition, the grantors couldn’t have intended to create a trust merely by signing it.30 

 

The May Instrument failed to achieve the grantors’ key estate-planning objectives, as expressed consistently both before and after its signing, particularly given its omission of the hotchpot formula.31

 

Although the Delaware Supreme Court held that the grantors’ failure to disclose the existence of the May Instrument wasn’t sufficient by itself to establish that they didn’t intend for it to create a trust, the court decided that the cumulative effect of the extrinsic evidence was sufficient to prevent the May Instrument’s proponents from meeting their evidentiary burden.

 

Trust Law Doctrines

Viewing the four lines of cases as a whole, the courts’ analyses tie together several trust law doctrines addressing a grantor’s intent to create a trust. As is true with many legal doctrines, the results, while initially surprising, ultimately make sense. Each link in the chain follows logically from the preceding one.

The first step is the burden of proof. While not all these decisions spell it out, it’s the proponent’s burden to establish that a grantor intended to, and did, create a trust. Furthermore, the proponent must meet that burden by the “clear and convincing evidence” standard—a more difficult standard to meet than the “preponderance of the evidence” standard that’s the usual burden of proof in American civil cases.32 

This burden and standard of proof can and should, in most instances, be satisfied by a signed trust document. But, that’s because there’s typically no other evidence to the contrary, which certainly wasn’t true in any of these four lines of cases. In other words, this heavy burden is ever-present; it’s just that fiduciaries and advisors almost never need to think about it.33 Little wonder that even this first, most basic component of these decisions may come as a surprise.

You might then ask how the deciding courts could have examined anything beyond the signed trust document. Whether it’s tagged as the four corners rule—so called because it bars evidence outside of the four corners of the document—or the parol evidence rule, it’s common to assume that evidence outside of the signed trust document itself simply can’t be considered. The approach in Otto v. Gore, in particular, might at first seem to violate these rules because the court examined events—and indeed, a supposedly superseding governing instrument—arising after the signed trust document in question.

But that’s an overly broad statement of the rule, for several reasons. First, the parol evidence rule is the threshold in questions of trust construction, but not in trust formation. The cornerstone in trust formation cases is, instead, the precept that the proponent bears the burden of proving, by clear and convincing evidence, that a trust was formed.

Second, both trust construction and trust formation queries are really subsets of a larger question: What did the grantor intend? That broader issue doesn’t require a myopic focus on the trust instrument. Instead, the document is considered in light of the circumstances surrounding its formation and the grantor’s intentions.34 

Third, in attempting to divine whether the grantor intended a particular document to create a trust, the reviewing court must first decide whether the document is integrated—that is, whether the grantor intended the document as a final expression of the alleged trust’s terms.35 To determine the answer, the Restatement (Third) of Trusts, for example, applies to trusts the definition of an “integrated agreement” from the Restatement (Second) of Contracts.36 Yet, the integrated agreement inquiry doesn’t just rely on the document in question, either; it “is a question of fact to be determined in accordance with all relevant evidence.”37 In other words, determining whether a trust document is integrated—the final expression of the grantor’s intent—may turn on extrinsic evidence.

Well, you might say, this begs the question: Doesn’t this mean that the parol evidence rule is being violated? The answer is “no,” because the parol evidence rule doesn’t apply when the document isn’t yet integrated. 

 

If the writing is an incomplete expression of the grantor’s intention or if the meaning of the writing is ambiguous or otherwise uncertain, evidence of the circumstances and other indications of the transferor’s intent are admissible to complete the terms of the writing or to clarify or ascertain its meaning.38

 

Examining the grantor’s actual intent amidst the surrounding circumstances—particularly as to whether the grantor intended the trust instrument as a final, integrated expression of her intent—makes sense. In Otto v. Gore, for example, the signing of the May Instrument was one aberrant blip in the middle of a very long spectrum of events. Strictly applying just a portion of the parol evidence rule, while ignoring all the other background in contravention of the actual test of grantor intent, is to fixate on the blip, instead of the whole picture. The law recognizes that simply can’t be the right approach.

 

Factors to Consider

Drawing these lessons together, here’s how to categorize the wide range of extrinsic evidence applied by these cases and to determine whether a grantor who signed a trust instrument really intended to create a trust: 

 

Whether the grantor notified others of the putative trust’s existence;39

 

What the grantor did with the putative trust
document after signing it;40

 

Whether, in signing the putative trust instrument, the grantor followed the pattern of formalities that he typically followed when creating trusts;41  

 

Whether the grantor’s conduct after signing the putative trust instrument was consistent with creating a trust;42  

 

Whether the designated trustee accepted the trust or assumed the duties of a trustee;43 and

 

Whether the putative trust instrument was consistent with the grantor’s estate-planning goals.44

  

The broader lessons outside of the narrow factual situations presented in these cases serve as excellent reminders for fiduciaries, advisors and litigators. If you encounter one of these unusual situations, remember that the case isn’t over merely because you, or another party, may be brandishing a signed trust document. First of all, the burden of proof is on the proponent to prove that a grantor intended to, and did, create a trust. The proponent must meet that burden by “clear and convincing evidence.” Second, courts can examine the full background to determine the grantor’s intent to create a trust generally, and whether the grantor wanted a particular document to be an integrated, final expression of his intent specifically. Third, in doing so, courts may examine both the intrinsic evidence, namely the document itself, and the extrinsic evidence, such as the circumstances surrounding the trust’s alleged creation and the grantor’s conduct.

 

Questions

But, the cases also remind advisors to look out for certain factual scenarios. In matters in which few or none knew about the purported trust instrument, advisors should ask questions, such as: (1) did the advisor get the document from the grantor or a reputable professional or fiduciary on behalf of the grantor or, instead, from an interested family member or other individual; (2) is there a sense that key individuals in the purported trust document or the grantor’s life—for example, a named fiduciary—weren’t aware of the supposed trust’s existence; (3) is the trust’s creation memorialized in any other records, such as a fiduciary’s or advisor’s internal memoranda; (4) was there some gap between creation and funding of the supposed trust or between creation and some other step in the supposed trust’s implementation or administration; and (5) is the purported trust inconsistent with the grantor’s known estate-planning goals?

Finally, though confidentiality is an increasingly common goal of grantors, and in some jurisdictions is even statutorily authorized,45 confidentiality goals ought to be harmonized with the above caveats, by involving reputable fiduciaries and advisors from the outset.                             

 

—The authors gratefully acknowledge the research and efforts of Mark E. Hansen, Derek T. Ho and Michael N. Nemelka of Kellogg Huber Hansen Todd Evans & Figel PLLC in Washington, D.C. and David E. Ross and Collins J. Seitz, Jr. of Seitz Ross Aronstam & Moritz LLP in Wilmington, Del., in their capacity as lead counsel in the Otto v. Gore case discussed herein. The authors also thank Michael R. Grandy, a 2013 summer associate with Connolly Gallagher LLP in Wilmington, Del., for his assistance with this article.

 

Endnotes

1. This article doesn’t address cases involving ambiguous documents, or trusts used for fraudulent purposes (the latter as found in U.S. v. Lawrence, 189 F.3d 838 (9th Cir. 1999)). This article also doesn’t address questions involving testamentary trusts, as such formation questions would presumably come up in a will contest, which would likely be governed by strict statutes of limitation.

2. Porreca v. Gaglione, 265 N.E.2d 348 (1970).

3. Ibid. at 348-49.

4. Ibid. at 349-50.

5. Ibid. at 350.

6. Ecclesiastes 3:1, Inc. v. Cambridge Sav. Bank, 407 N.E.2d 1318 (Mass. App. Ct. 1980).

7. Ibid. at 1320 (quoting Commonwealth Bank & Trust Co. v. Plotkin, 355 N.E.2d 917, 919 (Mass. 1976)).

8. Ibid. at 1320-21 (quoting Porreca, 265 N.E.2d at 350).

9. 623 N.E.2d 1134 (Mass. App. Ct. 1993), reh. den. 629 N.E.2d 1004 (Mass. 1994).

10. Ibid. at 1137-38.

11. In the Matter of Estate of Daniels (a/k/a Ayres v. King), 665 P.2d 594 (Colo. 1983).

12. The court observed in a footnote that “[t]he accuracy of this advice is not relevant to the disposition of this case and we express no opinion about it.” Ibid. at 598, n. 2.

13. Ibid. at 596.

14. Although, arguably, this point makes the case one involving a simple failure to fund the trust, the court was apparently unwilling to base its holding on that ground alone.

15. Ibid.

16. Ibid.

17. Ibid.

18. Because the court of appeals had reversed the trial court’s decision, it didn’t consider the trust’s proponents’ argument that they were entitled to a jury trial. The Colorado Supreme Court, thus, considered that argument, but disposed of it against the trust’s proponents. Ibid. at 597-98.

19. Palozie v. Palozie, 927 A.2d 903 (Conn. 2007).

20. In this case, the latter option would appear to be a nullity, as an unfunded trust would have no effect on or after the grantor’s death. Perhaps also noteworthy in the trial court’s determination of whether the grantor ever intended the trust instrument and quitclaim deed to take effect, was that, after the decedent created the documents in question, a family violence protective order was issued against the plaintiff on behalf of the decedent. Ibid. at 909.

21. Ibid. at 913. See also infra n. 40.

22. Otto v. Gore, 45 A.3d 120 (Del. 2012).

23. In the first phase of the bifurcated trial, the Delaware Court of Chancery held that the adoptee was equitably barred from any economic interest in the trust based on his promises to be a mere “placeholder” to even out the hotchpot formula, on which his ex-wife relied in adopting him. In re Trust for Grandchildren of Wilbert L. and Genevieve W. Gore, 2010 WL 3565489, at *6 (Del. Ch. Sept. 1, 2010).

24. In re Trust for Grandchildren of Wilbert L. and Genevieve W. Gore, 2011 WL 3444569, at *30 (Del. Ch. July 29, 2011). Among its other holdings, the Court of Chancery found that: (1) the October Instrument’s hotchpot formula was enforceable and should be honored, and (2) the adoption should be disregarded for purposes of applying the formula.

25. Supra note 22 at 129-31.

26. Ibid. at 131-35.

27. Ibid. at 132, 134 (the latter citing Daniels, supra note 11 at 596).

28. Ibid. at 133.

29. Ibid. at 134 (citing Daniels, supra note 11 at 596). Like the court in Daniels, the Delaware Supreme Court in Otto wasn’t willing to base its holding on the failure-to-fund ground alone, instead using the failure to fund as one point among many to find that the grantors didn’t intend the May Instrument to create the trust.

30. Ibid. at 133.

31. Ibid. at 133-34. Though not expressly stated in the opinion, another of these key objectives was to keep the trust assets out of the estates of their grandchildren. The May Instrument didn’t do so, while the October Instrument did.

32. George T. Bogert, George G. Bogert and Amy Morris Hess, et al., Bogert’s Trusts and Trustees Section 49 (Westlaw 2011) (Bogert) (“It is therefore not surprising that courts of equity have held that the chancellor should require, before finding the existence of a trust intent and its appropriate expression, that ‘clear and convincing’ evidence be presented to him”) and Section 50 (“The burden of proof is on a party who asserts the existence of a trust”). Neither Austin W. Scott and Mark L. Ascher, Scott and Ascher on Trusts (Lexis Nexis 2011) (Scott) nor Restatement (Third) of Trusts (2011) (Restatement (3d)) appears to address this subject, though two sections of the Restatement (3d) cite a case that sets forth this same rule—Sections 10 (Reporter’s Notes to comments d and e) and 14 (Reporter’s Notes to comments c and d), both citing Thomas v. Dye, 127 N.E.2d 228, 231 (Ohio Ct. App. 1954). Interestingly, the lower court in Otto v. Gore  held that the proponent must meet the burden merely by a preponderance of the evidence, 2011 WL 3444569 at *17, citing an earlier Court of Chancery decision to that effect, Cravero v. Holleger, 566 A.2d 8, 13, 17 (Del. Ch. 1989). But, the Delaware Supreme Court corrected that holding in Otto by imposing the “clear and convincing” standard, citing three Delaware precedents all predating Cravero, the most recent of which was a Delaware Supreme Court opinion issued only three years before Cravero: Levin v. Smith, 513 A.2d 1292, 1296-97 (Del. 1986); Bradford v. Vinton, 153 A. 678, 682 (Del. Ch. 1930); and Sadowski v. Rykaczewski, 147 A. 249 (Del. Ch. 1929).

33. Along similar lines, see Scott Section 4.1 (“In most cases, however, and particularly when the settlor manifests his or her intention in an instrument drawn by a competent lawyer, there is little difficulty in determining whether the settlor has manifested an intention to create a trust”).

34. Restatement (3d) Section 13 cmt. b (“In interpreting the words and conduct of property owners, circumstances that shed light upon their intentions are relevant”); Bogert Section 50 (“On the other hand any conduct by the settlor or trustee inconsistent with a trust and affecting the possession, use, profits, or power of alienation of the alleged trust res may well have probative effect against a trust”); Scott Section 4.1 (to gauge whether a grantor intended to create a trust, “any circumstance that might shed light on the settlor’s intention is relevant”); see also Chavin v. PNC Bank, 816 A.2d 781, 783 (Del. 2003); Bird v. Wilmington Soc. of Fine Arts, 43 A.2d 476, 480-482 (Del. 1945).

35. Scott Section 4.5 (parol evidence rule applies “if the manifestation of the grantor’s intention is integrated in a writing, i.e., if the grantor adopts a
written instrument as a complete expression of his or her intention”); Restatement (3d) Section 21 cmt. a.

36. Restatement (Second) of Contracts Section 209(1) (1981).

37. Restatement (Second) of Contracts Section 209 cmt. c.

38. Restatement (3d) Section 21 cmt. a; see also Scott Section 4.5. Bogert, however, doesn’t appear to address the integration requirement in its treatment of the parol evidence rule, except for a glancing mention in a footnote abstracting a case. See Bogert Section 51 at n.2. This same section of Bogert does, however, cite Daniels as an exception to the parol evidence rule. Ibid. at n.6.

39. Both the Restatement (3d) Section 14 cmt. c, and Scott Section 4.2.2 state the proposition that the grantor’s failure to notify others that she intends to create a trust indicates that she doesn’t intend to create one. The current edition of Bogert doesn’t appear to state this proposition, but—per both the Restatement (3d), Reporter’s Notes to cmts. c and d to Section 14, and Palozie—an edition of George T. Bogert, Trusts (Hornbook Series Student Edition) Section 23 (6th ed. 1987) does (“while failure to part with possession of the trust instrument is not necessarily fatal to the existence of the trust, it may constitute evidence that ... the settlor had not yet finally determined to create a trust”) (original text in Bogert hornbook not examined by the authors of this article). Also per Palozie, this proposition is also found in 90 C.J.S. Trusts Section 66, p. 192 (2002) (“Although communication of intent to create a trust and delivery of the trust instrument are ‘not essential to the existence of a trust [they are] of great importance in determining the real intent of the alleged declarant’”). For cases stating this proposition, see Daniels, supra note 11 at 596; Palozie, supra note 19 at 913; and Otto, supra note 22 at 132, 134. See also Delaware Trust Co. v. Fitzmaurice, 31 A.2d 383, 391 (“While of great importance in determining the real intent of the alleged declarant, notice to the supposed beneficiary is not usually regarded as an essential element in the creation of such trusts”).

40. Daniels, supra note 11 at 596;  Otto, supra note 22 at 132-34.

41. Otto, supra note 22 at 133.

42. Bogert Section 50 (“On the other hand any conduct by the settlor or trustee inconsistent with a trust and affecting the possession, use, profits, or power of alienation of the alleged trust res may well have probative effect against a trust”); Porreca, supra note 2 at 349-50 (the grantor “never divested himself of the control of the property through the trust instrument and at all times during his life retained control and possession over the property and the proceeds derived therefrom for his own use”); Daniels, supra note 11 at 596 (the grantor advised her lawyer that she wished to dispose of her estate through gifts); Otto, supra note 22  (for example, the grantors’ failure to do what they typically did after creating other trusts, such as sending a conformed copy to their attorney and requesting a taxpayer identification number from the Internal Revenue Service).

43. Porreca, supra note 2 at 350.

44. Ibid. at 133 (the earlier purported trust document neither included a hotchpot formula that the grantors created and worked on extensively both before and after the instrument was signed, nor kept the trust corpus out of their grandchildren’s estates).

45. See, for example, 12 Del. C. 3303(a) (permitting the terms of a governing instrument to “expand, restrict, eliminate, or otherwise vary” a beneficiary’s rights and interests, expressly including, among others, “the right to be informed of the beneficiary’s interest for a period of time”).