Summary
The Supreme Court of Alabama affirmed a summary judgment requiring the successor trustee of Georgia B. Slaughter's revocable trust to transfer the trust assets to her estate. The court held that Georgia's inter vivos transfer of assets into the revocable trust breached an enforceable agreement with her deceased husband not to change or revoke their wills, because the transfer was intended to circumvent that agreement. The court also rejected the trustee's failure-of-consideration argument and declined to consider an appellate challenge to attorney fees that had not been raised below.
Topics
Practice areas
Questions Presented
- Whether the agreement between Wright and Georgia not to change or revoke their wills was valid and enforceable.
- Whether Georgia's creation of a revocable trust and transfer of all her assets into it breached or circumvented the agreement not to change or revoke her will.
- Whether Wright's approximately $203,000 in day-trading losses constituted a failure of consideration rendering the agreement unenforceable.
- Whether the trustee could challenge the trial court's attorney-fee award on grounds not presented below.
Holdings
- The agreement by which Wright and Georgia agreed not to change or revoke their wills after the other's death was valid and enforceable under Alabama law.
- A surviving spouse may not circumvent an enforceable agreement not to change or revoke a will by transferring the estate's assets during life into a revocable trust when the transfer is made to defeat the agreement.
- Wright's approximately $203,000 in day-trading losses did not constitute a failure of consideration that rendered the agreement unenforceable.
- The trustee could not obtain appellate review of arguments opposing the attorney-fee award because those arguments were not presented to the trial court.
Key quotations
“contracts not to revoke a will or devise are enforceable under Alabama law and inter vivos transfers whether to individuals or trusts cannot be used to circumvent such contracts.” (at 788)
“There is a fundamental principle of law that "one cannot do indirectly what one cannot do directly."” (at 788)
Factual background
Wright and Georgia Slaughter executed reciprocal wills and substantially identical agreements not to change or revoke those wills after the death of the other spouse. Their estate plan provided for a family-support trust for the surviving spouse, with the remainder distributed among their children in specified proportions. After Wright's death, Georgia decided the testamentary disposition was unfair and, with legal assistance, created a revocable trust and transferred all of her assets into it, thereby leaving no assets to pass under her 1998 will to Bruce Slaughter and Barbara Slaughter Jones. The transfer was expressly structured to accomplish the desired disposition while avoiding the agreement not to change or revoke the wills.
Procedural history
Bruce Slaughter and Barbara Slaughter Jones sued Sharee Self, as successor trustee, seeking to invalidate the transfer of Georgia's assets into her revocable trust and have the assets treated as property of Georgia's estate. The trial court entered summary judgment for the personal representative, ordered the trustee to transfer all trust assets to the estate, awarded attorney fees and expenses against Mike Self's and Don Self's shares, and denied the trustee's counterclaim. The Supreme Court of Alabama affirmed.