In the arrangement where O signs 'O, as trustee of the O Trust' and opens a bank account, which describes the legal effect?

• A. O has created a trust.
• B. O has created a custodial arrangement but not a trust.
• C. There is no trust because the account is titled in her name.
• D. The trust is void for lack of beneficiaries.

Answer: (A)

The key idea is that showing someone acting in a fiduciary capacity and funding property into a named trust signals the creation of a trust. When O signs “O, as trustee of the O Trust,” she is expressly declaring she holds the account and its assets for the benefit of the trust’s beneficiaries. That capacity separates legal ownership (the trustee holds title to the assets) from beneficial ownership (the beneficiaries). Opening the bank account in that trustee capacity funds the trust and makes the trust arrangement effective.

This isn’t just a custodial setup because the language and the funding indicate an express trust with identified trustee and trust property. The fact that the instrument names a specific trust (the O Trust) supports that there is a trust, not merely personal ownership or a simple safekeeping arrangement. The account being titled in her personal name wouldn’t defeat the trust if she’s acting as trustee of the trust; the key is the designation of the trustee and the trust relationship.

So the legal effect is that an express trust is created, with O serving as the trustee and the bank account assets held for the trust’s beneficiaries.