How May The Grantor Create a Trust Without Owning Any Assets
The trust is a private contract, and the consideration needed to create a legal contract falls under The Peppercorn Rule. This rule is a metaphor for a very small cash payment or other nominal consideration, used to satisfy the requirements for the creation of a legal contract. It’s featured in Chappell & Co Ltd. v. Nestle Co. Ltd. (1960), which stated that “a peppercorn does not cease to be good consideration if it is established that the promisee does not like pepper and will throw away the corn.” The consideration needed to create such a contract between two parties (i.e. the grantor and trustee) can be done with just the exchange of a grain of sand or a single peppercorn. The Grantor doesn't need to have title to the property to create a Home Trust - the mere exchange of any object acts as sufficient consideration to enter into the contract for the benefit of the beneficiaries.
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