You asked for guidance on the following questions with respect to states in Region
1. Whether grantor trusts are revocable, and whether the grantor must use specific
terms to establish a remainder interest in a trust beneficiary?
2. Whether oral trusts are valid under state law?
1. Under Arizona, Hawaii, and California laws, grantor trusts are generally revocable
even if the trust terms state it is irrevocable. Under Nevada law, grantor trusts
are generally irrevocable unless the grantor expressly retains the power to revoke
it. Arizona, California, Hawaii, and Nevada all recognize that the grantor’s conveyance
of trust property to his or her “heirs” creates a remainder interest in a third-party
beneficiary, as opposed to merely creating a reversionary interest to the grantor.
2. Each of the states recognize oral trusts for personal property but require a written
document for a trust conveying real property.
I. REVOCABILITY OF GRANTOR TRUSTS
In general, the assets of an individual are counted as a resource to that individual
for purposes of Supplemental Security Income (SSI) eligibility. See generally Social Security Act § 1611(a); Program Operations Manual System (POMS) SI
01110.001. However, assets held in certain types of trusts may be exempted from counting as
a resource for SSI eligibility purposes.
A grantor trust is a trust in which the individual who provides the trust principle
is also the sole beneficiary of the trust. POMS SI 01120.200(B)(8). If the grantor has the legal authority to revoke or terminate the trust and
use trust funds for his or her support and maintenance, the trust principle is a resource
for SSI purposes. POMS SI 01120.200.D.1.a; see also POMS SI 01120.200.D.1.b. Conversely, if a trust is irrevocable, it might be excluded
from resource counting (if all other necessary conditions are met).
Regarding revocability, some states follow the general rule that when a grantor is
also the sole beneficiary of a trust, that trust is revocable regardless of any contrary
language it contains. See POMS SI 01120.200.D.3. By the same token, many states recognize that if the trust
document creates residual beneficiaries, the trust is generally considered irrevocable.
POMS SI 01120.200.D.3.
Under the common law doctrine of worthier title, an inter vivos (lifetime) conveyance
of property to the grantor’s “heirs” or “next of kin” was invalid because there was
no designated beneficiary. See Rest. of Prop. § 314. Normally, such an invalid conveyance would mean that the grantor
retained the beneficial interest. Id. at comment (d). However, a majority of states have abolished this common law rule,
preferring instead to interpret a conveyance to a grantor’s heirs as a valid conveyance
without reversion to the grantor. See Rest. (3d) of Prop. §§ 16.1, 16.3.
Each Region IX state’s laws regarding revocability and residual beneficiaries is discussed
Under Arizona law, a trust is generally revocable unless the trust explicitly states
it is irrevocable. See Ariz. Rev. Stat. § 14-10602 (“Unless the terms of a trust expressly provide that
the trust is irrevocable, a settlor may revoke or amend the trust subject to any limitations
prescribed in the terms of the trust”). However, if the grantor is the sole beneficiary
of a trust, it is revocable even when the trust says it is irrevocable. See, e.g., Dreyer v. Lange, 74 Ariz. 39, 41 (Ariz. 1952).
Arizona has enacted a statute abolishing the doctrine of worthier title. See Ariz. Rev. Stat. § 14-2710. Accordingly, a conveyance to to a grantor’s “heirs, heirs
at law, next of kin,” or similar language are valid and does not create a reversionary
interest in the grantor. Id.
In California, a trust is generally revocable unless it explicitly states that it
is irrevocable. See Cal. Prob. Code § 15400 (“Unless a trust is expressly made irrevocable by the trust
instrument, the trust is revocable by the settler.”); see also In re B~-H~, 348 B.R. 512, 519 (2006) (“Under California law, a trust is revocable unless it
is expressly stated to be irrevocable.”). Further, even if the trust explicitly states
that it is irrevocable, the trust is revocable if the grantor is the sole beneficiary
of the trust. See Levy v. Crocker-Citizens Nat. Bank, 14 Cal. App. 3d 102, 105, 94 Cal.Rptr. 1, 3 (Cal. App. Ct. 1971) (“It is conceded
that if a trustor is the sole beneficiary of a trust, he may revoke it even though
by its terms the trust is irrevocable”); Bixby v. California Trust, 33 Cal. 2d 495, 497 (1949) (“Where the trustor is the sole beneficiary no problem
arises of defeating the trust against the trustor's wishes”) (citing Rest. (2d) of
Trusts § 339 (“If the settlor is the sole beneficiary of a trust and is not under
an incapacity, he can compel the termination of the trust;” commenting that this rule
stands “even though it is provided in specific words by the terms of the trust that
the trust shall be irrevocable”)); Cal. Prob. Code § 15404 (if the settlor and all
beneficiaries of a trust consent, they may compel modification or termination of the
California enacted law abolishing the doctrine of worthier title.  See Cal. Prob. Code § 21108. Thus, a trust provision conveying a remainder interest to
the grantor’s “heirs” or “next of kin” is valid and does not result in a reversionary
interest to the grantor. Id.; Cal. Prob. Code § 15205 (a trust requires a beneficiary; this requirement is met
if there is a beneficiary or class of reasonably ascertainable beneficiaries or the
class is sufficiently described so as to determine that some person meets the class
description); POMS PS 01825.006.E (PS 12-122, California Trust Law: “Heirs” or “Heirs at Law”as Residual Beneficiary). Likewise, the identification of an individual or category of people (for instance,
a “spouse” or “living issue”) would also establish a remainder interest. See C.I.R. v. Goodan, 195 F.2d 498, 499 n.1 (9th Cir. 1952).
Under Hawaii law, a trust is irrevocable unless the grantor explicitly retains the
power to revoke the trust. Miller v. First Hawaiian Bank, 61 Haw. 346, 349 n.5 (1979) (citing Restatement (2d) of Trusts § 331 (generally,
a settlor cannot modify the trust if he did not expressly reserve a power of modification)).
But where the grantor is the sole beneficiary of a trust, it is revocable even if
the trust says it is irrevocable. See Cooke Trust Co. v. Lord, 41 Haw. 198 (1955) (citing Weymouth v. Deleware Trust Co., 45 A.2d 427, 428 (Del. Ch. 1946) (Generally, “where the settlor is the sole beneficiary
and is not under an incapacity, he may compel the termination of the trust”)); Security Pacific Bank Washington v. Chang, 80 F.3d 1412, 1415 (9th Cir. 1996) (Hawaii follows the majority rule on self-settled
spendthrift trusts); Rest. (2d) of Trusts § 339 (“If the settlor is the sole beneficiary
of a trust and is not under an incapacity, he can compel the termination of the trust”).
Hawaii enacted a statute abolishing the doctrine of worthier title. See Haw. Rev. Stat. § 560:2710. Language in a trust describing the beneficiaries of a
disposition as the grantor’s “heirs,” “heirs at law,” “next of kin” or similar language
does not create a reversionary interest in the grantor. Id.; see also In re K~’s Trust Estate, 47 Haw. 610, 620 (1964) (recognizing the term “heirs of the body” as establishing
a remainder interest).
In Nevada, a trust is irrevocable unless the grantor expressly retains the power to
revoke it. See Nev. Rev. Stat. § 163.560 (2013); Nicosia v. Turzin, 97 Nev. 93, 94 (1981) (per curiam) (“unless a power of revocation is specifically
provided for in the trust, revocation will not be permitted”). “Such a trust shall,
under no circumstances, be construed to be revocable for the reason that the settlor
and the beneficiary is the same person.” Nev. Rev. Stat. § 163.560.2.
Nevada does not require any specific language for creating a remainder interest; however,
the trust must have a reasonably ascertainable beneficiary or class of beneficiaries.
 Nev. Rev. Stat. § 163.006; see also Hannam v. Brown, 114 Nev. 350, 356 (Nev. 1998) (construing trusts in a manner effecting the apparent
intent of settlors).
II. VALIDITY OF ORAL TRUSTS
Generally, a writing is not necessary to create an enforceable inter vivos trust.
See Rest (3d) of Trusts § 20. However, pursuant to the Statute of Frauds, a writing is
necessary for the a trust involving real property. Id. This rule is followed by all states in Region IX, as detailed below.
Arizona recognizes oral trusts for personal property, but requires a written trust
for real property. See O’Brien v. Bank of Douglas, 17 Ariz. 203, 207 (Ariz. 1915) (recognizing oral trust for personal property); Ariz.
Rev. Stat. § 14-10407 (“a trust need not be evidenced by a trust instrument, but the
creation of an oral trust shall be established only by clear and convincing evidence
and the terms of the oral trust shall be established by a preponderance of the evidence);
Hall v. World Sav. and Loan Ass’n, 189 Ariz. 495, 504 (Ariz. 1977) (an oral trust for land falls “within the statute
of frauds,” i.e., it requires written document(s) setting forth with reasonable definiteness
the trust property, beneficiaries, and purpose).
California recognizes oral trusts for personal property, but requires a written trust
for real property. See Cal. Prob. Code § 15207 (recognizing oral trusts for personal property; stating that
an oral declaration is not sufficient to create a trust of real property); Cal. Prob.
Code § 15206 (a trust in relation to real property must be evidenced by a written
instrument signed by either the trustee or the settlor).
Hawaii recognizes oral trusts for personal property, but requires a written trust
for real property. See Wery v. Pacific Trust Co., 33 Haw. 701 (1936) (recognizing oral trust for personal property); Teixeira v. Teixeira, 37 Haw. 64 (1945) (a trust for land falls within the “statute of frauds,” i.e.,
it requires a writing of its terms).
Nevada recognizes oral trusts for personal property, but requires a written document
for trusts including real property. See Nev. Rev. Stat. § 163.009 (recognizing oral trust for personal property); § 163.008
(requiring trust for real property to be created by written instrument or operation
of law; such a trust may be recorded in the county where the real property is located);
Hardy v. U.S., 918 F.Supp. 312, 317 (D.Nev. 1996) (under Nevada law, a trust for real property
is not valid unless “created by operation of law or evidenced by a written instrument[.]”)
(citing Nev. Rev. Stat. § 163.008). A written trust may be in electronic form. See Nev. Rev. Stat. § 163.0095 (effective 2001).