Also known as: powers to revoke · revocation power
Written by attorneys · grounded in primary & secondary sources — see below
2 senses
A contractual mechanism that prevents an offeror from withdrawing an offer after the offeree has provided consideration or begun performance in reliance. The mechanism arises when the parties form an option contract that binds the offeror to keep the offer open for a stated period or until a condition is met.
A contractual mechanism that prevents an offeror from withdrawing an offer after the offeree has provided consideration or begun performance in reliance. The mechanism arises when the parties form an option contract that binds the offeror to keep the offer open for a stated period or until a condition is met.
Select any source to read its text and confirm it supports the definition.
Authority retained by a settlor to terminate a trust and reclaim its assets. The power renders the trust revocable, subjects trust property to the settlor's creditors, and treats the assets as owned in substance by the settlor for elective-share and creditor purposes.
Select any source to read its text and confirm it supports the definition.
Authority retained by a settlor to terminate a trust and reclaim its assets. The power renders the trust revocable, subjects trust property to the settlor's creditors, and treats the assets as owned in substance by the settlor for elective-share and creditor purposes.
Each sense below has its own examples, sources, and questions.
Frontier Outlet sent Barbara a signed letter offering to buy 500 dresses and reciting a $50 fee as consideration to keep the offer open until the end of the season. Barbara mailed the fee before Frontier Outlet attempted to revoke. The option contract prevented the revocation from taking effect, so Barbara could enforce the offer by completing performance.
An option contract is formed when the offeror receives consideration or the offeree begins performance in response to an offer that invites acceptance by performance. Once formed, the contract prevents the offeror from revoking the offer for the period or until the condition stated in the option is satisfied.
Supporting sources
Anne transferred her Ridge Aviation shares to a trust while a lawsuit was pending and retained the power to revoke. Blue Aero obtained a judgment against Anne and sought the trust assets. Because the trust remained revocable, Blue Aero could reach the shares to satisfy the judgment.
A husband transferred assets to a trust but kept the income for life, the power to revoke, and control over the trustees. After his death his wife claimed the assets under the elective-share statute. The court treated the retained power to revoke as equivalent to continued ownership, making the assets reachable for the elective share.
A husband created a revocable inter vivos trust with the power to revoke and receive principal during his life. After his death his wife asserted elective-share rights against the trust corpus. The court held that the retained power to revoke made the trust assets part of the husband's estate for elective-share purposes.
A settlor created a revocable trust retaining income for life and the power to revoke. After the settlor's death a creditor sought the trust assets. The court treated the power to revoke as giving the settlor ownership-equivalent control, allowing the creditor to reach the property.
Under the modern trend and the Uniform Trust Code, a revocable trust remains subject to the settlor's creditors because the settlor retains the power to reclaim the assets at any time. The power is viewed as equivalent to continued ownership, allowing creditors to reach the trust property.
Supporting sources
No. The trust itself is not part of the probate estate, but the power to revoke causes the trust assets to be treated as owned in substance by the settlor for elective-share calculations and creditor claims.
Supporting sources
…(Cf. Jenkins v. Moyse , 254 N. Y. 319.) In this case the decedent, as we have said, retained not only the income for life and power to revoke the trust, but also the right to control the trustees. We need not now determine whether such a trust is, for any purpose, a valid present trust. It has been said that “where the settlor…