Brief Fact Summary. Defendant Widow Sandra Porter-Englehart (Defendant Widow) of Testator Manfred Owen Englehart (Testator) appeals a lower court ruling in favor of Defendant Ex-Wife Merle (Defendant Ex-Wife) in a dispute about the proper division of insurance proceeds
Synopsis of Rule of Law. The creation of a trust does not depend on the words used, but rather on the clear intention of the parties to create the trust.
Issue. Did the revocation as a matter of law due to marriage of a will that establishes a trust comprised of insurance proceeds vitiate the beneficiary designations of the insurance policies?
Held. No. The insurance policy beneficiaries stand as designated by Testator, regardless of the revocation as a matter of law of Testator’s will. A life insurance policy is a not a will but a contract entered into between the insured on one side, and the insurance company. The policy proceeds are to be paid to the beneficiary designated within the contract. Therefore, money so paid does not pass by will, or by the laws that regulate intestate succession. Instead, satisfying the beneficiary is the contractual responsibility of the insurer, not the fiduciary responsibility of the administrator. Life insurance policies may create valid trusts. Such trusts, however, are inter vivos and not testamentary. This is because the trusts pass present interests created by contract and not by will. The rights of the beneficiary of the life insurance policies are vested when the designation is made in accordance with the terms of the contract of the insurance. They take complete effect that that ti
me. These benefits do not wait for their efficacy upon the happening of a future even. As such, these benefits are in no manner modified or increased at the time of the death of the insured. Finally, the existence of a trust does not depend on the terminology used. Instead, whether a trust was created depends upon the intention of the parties manifested by their words and conduct and the end that is to be accomplished. No particular form of words is required to create the trust. Instead, the existence of a trust should be ascertained from the intention of the parties. Here, Testator clearly intended to create a trust as he stated in his will, executed subsequent to his divorce. Several different documents may be used to demonstrate the intention to create a trust. In light of the surrounding circumstances, it seems that Testator intended to create a trust with the execution of his will and acceptance of his insurance policies. In no manner is this trust effected by intestacy laws.
Discussion. Again, the court here seeks to fulfill the testator’s intent. Since the testator seemed not to be aware of the revocation of his will as a matter of law because of his marriage, there is no evidence that Testator intended to revoke the named beneficiaries of his insurance policies.