Flashcards Studio

Galen transferred $400,000 to City Bank "as trustee to invest and distribute income equally to my children, Lina and Omar, for 10 years, then distribute principal equally to them." City Bank signed a receipt but later declined to serve before making any investment decisions. Lina argues that the trust failed because no trustee is willing to serve. Omar asks the court to appoint a replacement trustee.
In the same instrument, Galen also transferred a separate $50,000 account to "Lina as trustee for Lina, to use as Lina decides." No other person has any beneficial interest in that account, and the instrument imposes no standard or duty for Lina's use of the funds.
Which, if either, trust is valid? Discuss the effect of City Bank's refusal, the court's power to appoint a trustee, and the separate $50,000 account naming Lina as both trustee and sole beneficiary.