Gift to Pre-Deceased Beneficiary Vested Upon Trust's Creation

The Alabama Supreme Court rules that a gift in a revocable trust in which the settlor is also the trustee vests in the beneficiary upon the creation of the trust. Baldwin v. Branch (Ala., No. 1011214, March 5, 2004).

Claude H. Baldwin, Jr., created a revocable trust appointing himself as trustee, with all trust income to be paid to him during his lifetime. The trust named a trustee to succeed Mr. Baldwin upon his death, and directed the successor trustee to make certain dispositions from the trust, including one to Mr. Baldwin's sister, Bernice B. Branch. Mrs. Branch predeceased Mr. Baldwin, leaving two children, Miles Branch and Suzanne B. Ligon. Mr. Baldwin died testate without amending the trust. His son, Claude H. Baldwin III ("Claude") filed a complaint arguing that the distribution to be made to Mrs. Branch from the trust had lapsed upon her death. Mr. Branch and Mrs. Ligon answered that they were entitled to their mother's share of the trust. The trial court upheld the children's claim to Mrs. Branch's share of the trust.

Claude appealed, arguing that Alabama's antilapse statute should not be applied in determining who takes under the trust and that in the case of a revocable trust of which the settlor is also the trustee, a beneficiary's share does not vest upon the trust's creation.

The Supreme Court of Alabama affirms. While agreeing with Claude that the antilapse statute does not apply to trusts, it disagrees that Mrs. Branch's interest was contingent upon her surviving Mr. Baldwin. The court rules that Mrs. Branch's interest vested when the trust was created and therefore her estate is entitled to her share of the trust.

In a concurring opinion, one of the justices pays tribute to Claude's counsel, D. Harry Markstein, who, despite having lost, "represented his client with zeal, clarity of thought, and legal scholarship that lawyers many years his junior would do quite well to emulate." Attorney Markstein argued the case one year ago, at the tender age of 90.

For the full-text of this decision, go to:  https://caselaw.findlaw.com/al-supreme-court/1430997.html

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