Jimenez v. Lee


FACTS: As a minor, Jimenez (P) received a bond and a cash gift, which were held by her and one of her parents jointly The donors of these gifts intended for the money to be used for P's education P sued her father (D), alleging that the funds were held for her in trust, and for an accounting of the funds The lower court dismissed the complaint, holding that D held the funds as P's custodian, pursuant to the Uniform Gift to Minors Act, and not as a trustee P appealed

ISSUE: Does transfer of property with the intent that it be used for the educational needs of a third party create a trust?

HOLDING: The Supreme Court, O'Connell, C.J., held that defendant held savings bond and savings account in trust for benefit of plaintiff, that, accordingly, he did not hold shares of bank stock acquired with trust assets as a ‘custodian’ under the Uniform Gift to Minors Act, that plaintiff was entitled to impose a constructive trust or equitable lien on the stock, that mere fact that trust assets were registered in daughter's name along with her parents' names did not, under doctrine of merger of legal and equitable title, extinguish the trust and that defendant had a duty to account and to prove that expenditures were made for trust purposes. Reversed and remanded.

RULE: The words "in trust" need not be used to create a trust so long as the transfer of property is made with the intent to vest ownership in a third party.

ANALYSIS: Fact that savings bond purchased by paternal grandmother for granddaughter's education was registered in granddaughter's name along with her parents' name and that cash gift for the same purpose was deposited in savings account in name of granddaughter and her father, brother and sister did not, under doctrine of merger of legal and equitable title, operate as an extinguishment of the trust. Further, A formal instrument containing specific language is not required in order to create a trust All that is required is the intent to create the trust Some courts will find such intent where a the donor attempted, but failed, to make a legally effective lifetime gift.