## Facts

- Jerome J. Cate (“Jerry”), a Montana attorney, drafted and signed a handwritten instrument on January 2, 1988 titled “Irrevocable Trust Reserving Income For Life.”
- The instrument purported to “sell, assign and convey” specified mineral interests to a trust for the benefit of Jerry’s three daughters, Shannon, Kristin, and Sara, naming Shannon as trustee.
- The instrument reserved to Jerry a life interest in income, with post-death beneficial interests for the daughters for a term of years and ultimate distribution of the corpus to them or their heirs per stirpes.
- The instrument stated it was executed in anticipation of Jerry’s remarriage to JoAnn Cate on February 14, 1988.
- Jerry died intestate on April 4, 1995; JoAnn served as personal representative of his estate.
- It was undisputed that Jerry never conveyed the identified mineral interests to the trust and never delivered the trust property to Shannon as trustee.
- Shannon, individually and as conservator for Sara, sought to enforce the instrument as a trust and to compel the estate to convey the mineral interests to her.
- The district court denied JoAnn’s summary-judgment motion, granted Shannon summary judgment, ordered conveyance of the interests, and awarded costs.
- JoAnn appealed.

## Issues

1. Whether the handwritten instrument created a testamentary trust effective at death, or instead was an attempted inter vivos trust that failed for lack of transfer or delivery to the trustee.
2. If a testamentary trust existed, whether it would be subject to statutory spousal allowances, creditor claims, and expenses of administration.

## Decision

- The Montana Supreme Court reversed the summary judgment for Shannon and remanded.
- The Court held the instrument did not create an enforceable trust with respect to the mineral interests.
- The Court classified the instrument as an attempted inter vivos trust, not a testamentary trust.
- Because Jerry never transferred or delivered the mineral interests to the trustee (and did not effectively declare himself trustee), the attempted inter vivos trust failed.
- The Court did not reach the second issue because the first issue was dispositive.

## Legal Principles

- An instrument using present-transfer language and reserving a life income interest may evidence an intent to create an inter vivos trust rather than a trust that takes effect only at death.
- A valid inter vivos trust generally requires intent, identifiable beneficiaries, identifiable trust property, and completion of funding by transfer or delivery of the trust property to the trustee (or an effective declaration that the owner holds the property in trust).
- A detailed written “trust” document does not create an enforceable inter vivos trust where the settlor does not complete the property transfer or delivery necessary to place the property in trust.
- When an attempted trust fails, the property remains part of the decedent’s probate estate and is administered under ordinary probate rules (including intestacy where applicable).

## Conclusion

The court held that Jerry’s handwritten “Irrevocable Trust” was an attempted inter vivos trust that was never funded because the mineral interests were not transferred or delivered to the trustee; therefore, no enforceable trust existed and the interests remained in the intestate estate, requiring reversal of the order compelling conveyance.


Cate-Schweyen v. Cate, 303 Mont. 232 (Mont. 2000)