Deceased Beneficiary’s Share of Trust Goes to Her Children

MARCH 22, 2004 VOLUME 11, NUMBER 38

Claude Baldwin, Jr., prepared a living trust to avoid probate of his estate. His trust directed a distribution to be made at his death to his sister Bernice Branch. The trust was silent as to what would happen if Ms. Branch died first. Of course Mr. Baldwin could have simply amended his trust when his sister did die but, for whatever reason, he did not. The result was a dispute between her two children and his son over who would receive the distribution.

Mr. Baldwin’s son argued that the distribution to his aunt should lapse as a result of her death. In that case he, as the ultimate beneficiary, would receive Ms. Branch’s distribution. Her two children, however, pointed to Alabama’s “antilapse” statute in their argument that the distribution should be made to them.

Antilapse statutes are designed to prevent exactly the problem in Mr. Baldwin’s story. They typically provide that when a person named in a will dies before the testator, the recipient’s children receive the bequest—assuming, of course, that the will does not provide otherwise. The problem with applying the antilapse statute to Mr. Baldwin’s situation is that the distribution was set out in his trust rather than in his will.

As living trusts have become popular estate planning devices problems have occasionally arisen over the applicability of laws governing wills. So, for instance, courts have held that there is no presumption of revocation of a trust arising from the fact that the original document is missing—though there is such a presumption for wills in most states. The Alabama Supreme Court in Mr. Baldwin’s case reaffirmed that wills and trusts are different creatures when it held that the antilapse statute is limited to wills, and does not apply to living trusts.

All was not lost for Ms. Branch’s children, however. The court ruled that the rights held by Ms. Branch arose at the time of signing of the trust (subject, of course, to Mr. Baldwin’s ability to amend). With her death her estate—and thus her children—received the distribution. Baldwin v. Branch, March 5, 2004.

On an interesting human-interest side note, one of the Justices of the Alabama Supreme Court took the time to specially complement the lawyer for Mr. Baldwin’s son. Although he lost, wrote Justice Champ Lyons, Jr., lawyer D. Harry Markstein, Jr., wrote a scholarly brief and argued the case with clarity and zeal. The fact that Mr. Markstein was 90 years old at the time of argument did not diminish his able representation, and younger lawyers would do well to emulate Mr. Markstein, said Justice Lyons (himself a sprightly 64).

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