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Beneficial Interest in a Trust Does Not Equate to Beneficial Ownership of Real Property Held in Trust

Beneficial Interest in a Trust Does Not Equate to Beneficial Ownership of Real Property Held in Trust

Fandacone v. Fandacone, NBSP052634, 2011 WL 4347935 (Conn. Super. Ct. Mar. 17, 2011)

In a case before the Superior Court of Connecticut, a beneficiary of a revocable family trust filed a motion to dismiss the summary process action brought by the trustee to regain possession of premises held in trust and occupied by the beneficiary. The trial court denied the motion to dismiss.

In 2003, the trustee and her husband created a revocable family trust, consisting of three sub-trusts. The trust named six beneficiaries, including the current trustee. The contested premises were allocated to “Sub Trust A” and occupied by one of the beneficiaries. The current trustee became the sole trustee upon her husband’s death in 2004. In June 2009, the trustee served notice to the beneficiary to quit the contested premises within three weeks, citing nonpayment of rent, lapse of time, and that the beneficiary never had a right or privilege to occupy the premises. The beneficiary moved to dismiss the summary process action.

According to Connecticut law, a summary process action requires the individual bringing the action to be the owner of the property. Conn. Gen. Stat. § 47a-23(a)(3). In a trust, the trustee holds legal title to the assets of the trust. See B.A. Ballou & Co. v. Citytrust, 218 Conn. 749, 753, 591 A.2d 126 n .2, 218 Conn. 749, 591 A.2d 126 (1991). A trust beneficiary has no legal title or ownership interest in the individual assets of the trust. The Connecticut Supreme Court has held that a beneficiary of a revocable trust does not have a vested property interest, but only an expectancy until the death of the settlor renders the trust irrevocable. See Bartlett v. Bartlett, 220 Conn. 372, 376–77, 599 A.2d 14 (1991).

Although the beneficiary did not dispute that the trustee held legal title to the contested premises, he argued that the trustee could not bring a summary process action against him because he was a co-owner of the contested premises. He contended that he was entitled to beneficial ownership of the premises and, therefore, fell within the definition of “owner” provided by Connecticut law, Conn. Gen. Stat. § 47a-1(e).

Connecticut law defines property ownership in terms of both legal title and beneficial ownership. Conn. Gen. Stat. § 47a-1(e). An “owner” includes one in whom is “vested…all or part of the beneficial ownership and a right to present use and enjoyment of the premises.” Conn. Gen. Stat. § 47a-1(e)(2). Beneficial ownership is the right to enjoy the premises where legal title is in one person, the right to beneficial use or interest is in another person, and the courts recognize and can enforce the right to beneficial use or interest. Bender v. Nuzzo, Superior Court, Judicial District of New Haven, Housing Session, Docket No. SPNH 9607 47892 (July 10, 1997, Levin, J.). Beneficial use is distinguished from the right of occupancy or possession because the right to beneficial use encompasses the right to use and enjoy property to one’s liking.

In hearing the motion to dismiss, the court refused to determine whether the beneficiary had a vested or contingent beneficial interest in the family trust, which would not become irrevocable until the trustee’s death. However, the court found that the beneficiary only demonstrated that he occupied the premises. He did not show that he had any right to the present use and enjoyment of the premises, under the terms of the trust or otherwise, as required to establish beneficial ownership. Absent legal title to the premises or vested beneficial ownership, the court found that beneficiary was not an owner of the property and that the trustee had proper standing to bring the summary process action against him.

Therefore, the court denied the beneficiary’s motion to dismiss the trustee’s summary process action to evict him from the contested premises.

Should you have any questions relating to real estate, trust or personal asset protection issues, please do not hesitate to contact Attorney Susan Maya, at SMaya@Mayalaw.com or 203-221-3100, and Attorney Russell Sweeting, at RSweeting@Mayalaw.com or 203-221-3100, in the Maya Murphy office in Westport, Fairfield County, Connecticut.

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