Rosenblum v. Gibbons

• Decision Date: 31 December 1984
• Docket Number: No. 48170,48170
• Citation: 685 S.W.2d 924
• Parties: Stanley M. ROSENBLUM, Trustee, v. Antoinette GIBBONS, respondent. Patrick Gibbons, and Lawrence Gibbons, and Elizabeth Gibbons Vasquez, Appellants.
• Court: Missouri Court of Appeals

Page 924

685 S.W.2d 924

Stanley M. ROSENBLUM, Trustee, v. Antoinette GIBBONS, respondent Patrick Gibbons, and Lawrence Gibbons, and Elizabeth Gibbons Vasquez, Appellants.

No. 48170.

Missouri Court of Appeals,

Eastern District,

Division One.

Dec. 31, 1984.

Motion for Rehearing and/or Transfer to

Supreme Court Denied Feb. 13, 1985.

Application to Transfer Denied

April 2, 1985.

Francis L. Ruppert, Clayton, for defendants-appellants.

Merle L. Silverstein, Clayton, for plaintiff-respondent.

GAERTNER, Judge.

At issue here is the validity of a comprehensive testamentary plan of Harold J. Gibbons. On March 20, 1978, Gibbons executed a will and a trust indenture. The will, after providing for the payment of debts and the distribution of tangible personal property, provided for the entire residual estate to be added to the corpus of the trust simultaneously created. The trust indenture recited, as a premise, that Gibbons, the grantor, had caused his interest in the retirement and family protection plan of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America to be made payable to Stanley M. Rosenblum, as trustee named therein. The creation of the trust was stated to be in consideration of this premise "and for One Dollar ($1.00) and other valuable considerations, receipt of which is hereby acknowledged." The indenture anticipated the receipt by the trustee of the proceeds of the retirement plan upon the death of the grantor and other assets, including the proceeds of insurance policies on the life of the grantor. The trust was revocable and provided for grantor's power to amend in whole or in part by written instrument. On June 19, 1981, a second trust indenture was executed. The language of this instrument, including the named trustee, the corpus and the powers of the trustee, is identical to the 1978 indenture. The only material change consists in the provisions for distribution of assets to the beneficiaries of the trust. The dispositive provisions of the 1978 instrument were more favorable to grantor's children, those of the 1981 instrument favored his wife. The 1981 instrument does not expressly revoke or refer in any way to the 1978 instrument. On the same date, Gibbons executed a "beneficiary designation and benefit payment statement" directing the trustees of the retirement plan to pay death benefits to the trustee named in the indenture of June 19, 1981 upon his death prior to his retirement.

Gibbons died on November 17, 1982. The trustee received $438,752.04 from the retirement plan and $15,000.00 from a life insurance policy. On June 9, 1983, the trustee filed this action for declaratory judgment. He alleged that a dispute existed between the wife and the children regarding which of the two trust indentures established the lawful trust in which to receive and to administer the funds from the retirement plan. Naming the wife and children as defendants, the trustee prayed for a judicial declaration of which of the two trusts indentures was valid. The wife, by counterclaim and crossclaim, sought a declaration that the 1981 trust indenture was a valid amendment of the 1978 trust. The children prayed for a declaration that both trusts were null and void.

On November 14, 1983, the cause was tried before the court without a jury. On November 18, 1983, the trial court issued findings of fact and conclusions of law, holding the 1981 trust instrument to be a valid amendment of the 1978 trust. The children appeal contending the trust was invalid as an inter vivos trust because it was not funded before the death of the grantor, that it was not a testamentary trust because not executed before witnesses as required by § 474.320, RSMo.1978, and alleging trial court error in the admission in evidence of the testimony of Stanley Rosenblum regarding the employment of Gibbons at the time of his death. We affirm.

Under Murhpy v. Carron, 536 S.W.2d 30 (Mo.banc 1976), the judgment of the trial court in a bench-tried case is to be sustained "unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law." Id. at 32. The judgment of the trial court must be affirmed if it is correct on any theory. Washington University Medical Center v. Komen, 637 S.W.2d 51, 53 (Mo.App.1982). Within these narrow parameters we undertake an analysis of the testimonial and documentary evidence.

THE 1978 TRUST

The children dispute the finding of the trial court that the 1981 trust was an amendment of the 1978 trust and argue that both were invalid. This argument is predicated upon their contention that neither of the trusts was established with a then existing identifiable corpus actually delivered, assigned or conveyed to the trustee. The elements essential to the establishment of an inter vivos trust are set forth in Webb v. St. Louis County National Bank, 551 S.W.2d 869, 875 (Mo.App.1977):

It has long been held that "to establish a valid express trust inter vivos, there must be (1) a beneficiary, (2) a trustee, (3) a trust res so sufficiently described or capable of identification that title thereto can pass to the trustee, (4) actual delivery of the corpus, its character considered or a legal assignment of the same to the trustee actually conveying present title by the owner under the circumstances which unequivocally disclose an intent to hold it for the use of another."

Here, the children seize upon the fourth requirement and assert a two-fold argument in support of their contention that there was no actual delivery, assignment or conveyance to the trustee. They argue that because the corpus of the trust consisted solely of the retirement benefits which were not to be received until the death of Gibbons before his retirement, actual delivery was occasioned by his death and, therefore, the trust was testamentary rather than inter vivos. Secondly, they assert that the designation of the trustee as beneficiary was not a conveyance or assignment as it vested no title in the trustee, but created a mere expectancy. In support of this latter contention, they rely upon Bell v. Garcia, 639 S.W.2d 185, 191 (Mo.App.1982) wherein this court expressed the general rule that the beneficiary of a life insurance policy, subject to change by the insured, does not possess a vested right to the proceeds of the policy, but only a conditional interest or expectancy subject to termination. Their reliance on Bell is misplaced. The rule expressed therein was stated in support of the conclusion that a first beneficiary of a life insurance policy possessed insufficient interest to complain of noncompliance by the insured with policy requirements regarding the form and manner of effecting a change of beneficiary. Waiver of such noncompliance is a matter solely within the purview of the insurer; the original beneficiary, having only an expectancy subject to divestiture, has no standing to assert noncompliance with formalities. Bell is not authoritative regarding the question of whether or not a beneficiary designation is a sufficient delivery of an identifiable trust res to constitute the funding of the trust.

We are cited to no Missouri decision and independent research has not disclosed any Missouri case which has ruled upon this precise question. In Scott on Trusts, 3rd edition, vol. 1, § 57.3 (1967), the issue of funding an insurance trust by means of beneficiary designation is discussed.

A question arises where the insured has reserved the power to change the beneficiary of the policy and other incidents of ownership, and perhaps in addition the power to change the beneficiaries of the trust. Is the trust invalid as a testamentary disposition? It is arguable that the trust does not arise until the death of the insured, that his death is a condition precedent to the creation of the trust, and that therefore the disposition is testamentary. The answer is, however, that the beneficiary of the policy as soon as he is named trustee holds his rights as beneficiary of the policy in trust. The mere fact that those rights can be terminated at any time by the insured, and that the rights of the beneficiaries of the trust are enjoyable only after the death of the insured, and that the trustee has no active duties until the death of the insured, does not prevent a trust from arising immediately. It is not a disposition subject to the condition precedent of the death of the insured, is not a mere expectancy, but is a trust which is subject to revocation or modification during the life of the insured. It is true that until the death of the insured it is a pretty thin trust. The difficulty in upholding the trust, however, is no greater than in upholding the rights of the beneficiary of an insurance policy where no trust is involved but where the insured reserves power to change the beneficiary. A policy of life insurance where the insured has reserved the right to change the beneficiary is in a sense testamentary in character, but the courts have never had any difficulty in permitting the beneficiary to recover the proceeds on the death of the insured if he had not in fact changed the beneficiary. The fact that the policy is payable to a beneficiary as trustee for others makes it no more testamentary than if it were payable to the beneficiary absolutely. Moreover, the fact that the insured may have reserved power not only to change the beneficiary of the policy but also to change the beneficiaries of the trust, or otherwise to modify the terms of the trust, would seem to make the disposition no more testamentary. The danger of fraud which lurks in ordinary unattested testamentary dispositions is...