Trusts – Life Insurance Trusts – Contingent Unfunded Life Insurance Trust as Testamentary Disposition

Settlor named defendant bank beneficiary of eight insurance policies on his life. At the same time he entered into a trust agreement with the bank under which the bank was to hold the policies until the death of the settlor and, upon his death, collect the proceeds and distribute them according to one of two alternate methods of distribution. If his wife elected to reject the provisions made for her in his will and insisted on her statutory share of his estate, then the insurance proceeds were to be divided info four equal parts and paid to his four daughters. If, however, the wife elected to take under the will (under which she received about one-fifth of the estate), the insurance money was to be divided into five equal parts to be paid to his wife and four daughters. Settlor died some two and a half years later leaving both the will and trust agreement still in force although he had reserved the right to revoke the trust at any time. His widow attacked the trust agreement as testamentary and prayed that the trustee be ordered to pay over the proceeds of the policies to the executor of the settlor’s estate. A demurrer by the trustee and other defendants was sustained, and the widow appealed.Held, three justices dissenting, since during the life of the settlor no legal interest passed to the trustee and no equitable interest passed to the beneficiaries of the trust, the instrument was void as a testamentary disposition not executed in accordance with the statute of wills. Bickers v. Shenandoah Valley Nat. Bank, (Va. 1955) 88 S.E. (2d) 889.