## Facts

- In 1992, Claude H. Baldwin, Jr. created the “Claude H. Baldwin, Jr., Revocable Trust,” naming himself trustee, reserving the right to receive all net income for life and to remove assets from the trust.
- The trust provided that, upon Claude’s death or incapacity, a successor trustee would administer the trust and, after Claude’s death, distribute trust property to named beneficiaries, including a disposition to Claude’s sister, Bernice Branch.
- Bernice died before Claude, leaving two children: Miles Branch and Suzanne B. Ligon.
- Claude died testate in 2001; the trust had not been amended.
- In related declaratory-judgment litigation over what property belonged to Claude’s estate versus the trust, Claude’s son filed a cross-complaint asserting that the trust disposition to Bernice lapsed at her death and reverted to Claude’s estate.
- Bernice’s children claimed entitlement to the beneficial interest associated with Bernice’s share.
- The trial court struck an affidavit from the drafting attorney as inadmissible extrinsic evidence (treating the trust as unambiguous) but granted summary judgment to Bernice’s children.

## Issues

1. Whether the trust disposition to Bernice lapsed because she predeceased the settlor of a revocable inter vivos trust.
2. Whether Bernice’s interest under the revocable trust was vested (subject to divestment) or contingent such that it could fail upon her predeceasing the settlor.
3. Whether, absent express survivorship language, the interest passed through Bernice’s estate to her heirs rather than reverting to the settlor’s probate estate.

## Decision

- The Alabama Supreme Court affirmed summary judgment for Miles Branch and Suzanne B. Ligon.
- The court held the disposition to Bernice did not lapse upon her death.
- The court characterized Bernice’s beneficial interest as vested at trust creation, subject to divestment by the settlor’s reserved power to revoke or amend, which he did not exercise.
- Because the interest vested, it passed to Bernice’s estate upon her death and then to her heirs, rather than reverting to Claude’s estate under his will.
- The affirmance rested on interpretation of the trust instrument as a matter of law, without reliance on excluded extrinsic evidence.

## Legal Principles

- In a revocable inter vivos trust, named remainder beneficiaries may hold present vested interests subject to divestment by the settlor’s reserved power to revoke or amend.
- When a beneficiary’s interest in such a trust is vested and the settlor does not revoke or amend, the beneficiary’s death before the settlor does not, by itself, extinguish the interest.
- Absent contrary language in the trust (such as a survivorship condition), a vested beneficial interest generally passes through the deceased beneficiary’s estate under ordinary succession rules.
- Lapse analysis associated with testamentary gifts is not automatically controlling for vested interests created by an inter vivos trust; the dispositive effect turns on the trust’s text and the nature of the interest created.

## Conclusion

The court concluded that Bernice’s share under the revocable trust vested when the trust was created and, because the settlor did not amend or revoke that disposition, the share did not lapse when Bernice predeceased him but instead passed through her estate to her children.


Baldwin v. Branch, 888 So. 2d 482 (Ala. 2004)