Kathy Van Story, as next friend of minor Brandy Rebecca Thatcher, appeals a trial court decision regarding the distribution of a $100,000 life insurance policy proceeds from the deceased Janie Perry Thatcher Wyatt. The trial court ordered that the funds be held in trust for Brandy until she turns 25 or completes her education, with any remaining funds shared equally with Defendant Bobby Wyatt. The Plaintiff contends that the Decedent intended for the entire trust to benefit Brandy.
Key facts reveal that the Decedent, who married Defendant and had Brandy from a previous marriage, developed cancer and passed away in 1994, having named Defendant as the beneficiary of the policy. Testimony from Decedent’s sister supports the Plaintiff’s claim that the Decedent intended for the policy's proceeds to be held in trust for Brandy’s education and care, requiring both Plaintiff and Defendant to act as co-trustees. In contrast, Defendant denies the existence of such a trust, asserting that the Decedent only requested he take care of Brandy. The appellate court reversed the trial court’s judgment, indicating a misinterpretation of the Decedent's intent regarding the trust's purpose.
Presley asserted that the funds from Decedent's life insurance policy were intended exclusively for Brandy. Floye Cobb, Decedent's aunt, confirmed that Decedent initially executed a $100,000 life insurance policy for Brandy's benefit during her marriage to Ron Thatcher. After their divorce and prior to marrying Defendant, Decedent created another $100,000 policy, designating Cobb as the beneficiary and instructing her to use the proceeds for Brandy's care. Following her marriage to Defendant, Decedent changed the beneficiary to him and directed both him and Plaintiff to act as co-trustees of the policy proceeds for Brandy's care and education. Multiple witnesses, including Decedent’s sister and cousin, testified that Decedent emphasized the proceeds were for Brandy's medical expenses, education, and living costs, with a clear intent for Plaintiff and Defendant to be co-trustees.
After Decedent's death, Defendant collected the insurance proceeds and established a trust named the "Brandy Thatcher Trust," without consulting Plaintiff. He appointed William Lea as trustee and structured the trust to terminate when Brandy turned 25, dividing the assets equally between Brandy and his sons. Following Brandy’s relocation to live with Plaintiff, Defendant instructed Lea to terminate the trust and transfer the funds to his son Phillip Wyatt.
The central legal question is whether the trial court erred in granting Defendant a one-half interest in the life insurance proceeds after Brandy turns 25 or completes her graduate education. The document references the potential imposition of a resulting trust to prevent injustice, as established in Tennessee case law.
A resulting trust arises when one individual holds legal title to property but is obligated to benefit another, even without explicit intention to create a trust, as long as there is no fraud involved. This principle applies to both real and personal property, and such trusts can be established through parol evidence. For an oral resulting trust to be valid, any declarations must occur before or at the time of the property transfer, supported by clear, cogent, and convincing evidence. The testimony of a single, interested witness is generally insufficient to meet this standard. Resulting trusts reflect the actual or assumed intentions of the parties involved, and they can arise in various situations, such as when property is transferred without formal trust creation but with the intent for the transferee to hold it in trust.
In the analysis of various cases involving resulting trusts, the court references Savage v. Savage, where a son conveyed property to his father to hold in trust while he worked away. Upon the father's death, the court established a resulting trust in favor of the son, asserting that such trusts arise when property is conveyed for the benefit of a third party. In another case, Estate of Wardell, a wife removed her name from joint accounts due to blindness, and after her husband's death, their son claimed ownership of the accounts. The court imposed a resulting trust on these accounts, mandating that the son manage them for the benefit of his mother and later divide them with his sister. Burleson v. McCrary involved a father transferring property to one daughter while intending it to benefit all his children, leading the court to impose a resulting trust requiring reconveyance of the property to the estate. In Cook v. Cook, an oral trust was recognized for life insurance proceeds, with the decedent's brother named as trustee to manage the funds according to the decedent's wishes for his step-son and son. The court concluded that the decedent had established a trust for her natural child, Brandy, from her life insurance proceeds, appointing Kathy Van Story as trustee and reversing the trial court’s judgment. Costs on appeal were assigned to the appellees, with provisions for execution if necessary.
