Indications for a Sham Trust

[Sapphire Capital]

The validity of a trust must be assessed in light of all of the circumstances, taking into account the following red flags (or badges of fraud) that place upon the party asserting the trust an obligation to explain:

(a) listing a trust property for sale without disclosing the existence of the trust;

(b) failing to notify a bank or mortgagee as to the existence of the trust and its effect on title;

(c) operating in a manner which disregards the proper operation of the trust;

(d) treating the property as one's own and only invoking the alleged trust when convenient to do so;

(e) using a property to secure financing (particularly where the trust is not disclosed);

(f) the payment of all expenses for property by the settlor, while the alleged beneficiaries contribute nothing;

(g) retaining personal control of an asset for one's own use;

(h) encumbering an asset by using it as security for personal finances;

(i) not registering a trust agreement on title; and

(j) a general lack of documentation