The Alabama Supreme Court On Proving The Existence and Terms Of an Oral Trust

Ledbetter v. Ledbetter involved siblings disputing over the existence of an oral trust. “The Alabama Supreme Court reversed a summary judgment finding that the evidence was insufficient to support the existence of an oral trust under Alabama Law.”

Lois, the mother of William (known as “Russell”), Laurie Ann, and Warren, died in August 2015. She was survived by these three children. 

Laurie Ann and Warren were expressly excluded from the will and unsuccessfully contested the will. When Laurie Ann and Warren contested the will, they learned that Russell was the beneficiary of the life insurance policy and was also trustee of the Lois Ann Ledbetter Family Irrevocable Trust. Russell had claimed the life insurance policy proceeds and deposited them into his personal checking account. 

Laurie Ann and Warren sued Russell and claimed that Lois had created an irrevocable trust for their benefit. 

Laurie Ann and Warren submitted evidence that Russell applied for a tax identification number for the Trust and made at least the initial premium payment on the policy. Lois and Warren also submitted an unsigned trust document prepared by another of Lois’s attorneys. This document stated that there was an oral agreement between the “Grantor and the Trustee. 

Under Alabama Uniform Trust Code, you must prove an oral trust’s creation and terms by clear and convincing evidence. 

The Alabama Supreme Court found that a reasonable jury could find that Laurie Ann and Warren showed by clear and convincing evidence the creation and terms of an oral trust. 

See The Alabama Supreme Court On Proving The Existence and Terms Of an Oral Trust, Probate Stars, October 27, 2020.