Grantor Lacks Standing To Rescind Irrevocable Trust – Unilateral Mistake

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Hon v. Hon, et al., [Ms. 1190682, May 21, 2021], ___ So. 3d ___ (Ala. 2021). The Court (Wise, J.; Bolin, Sellers, and Stewart, JJ., concur; Parker, C.J., concurs in the result) affirms the Madison Circuit Court’s summary judgment dismissing Jeremy Hon’s claims seeking to rescind an irrevocable trust agreement as well as transfers of his assets into the trust. Jeremy alleged that he had signed the Trust Agreement based on “‘his mistaken understanding of the effects thereof ... and that, due to mistake, the Trust Agreement does not accomplish his intent.’” Ms. *3.

In affirming, the Court explains

The defendants thoroughly set forth statutes and caselaw that appear to have established a prima facie case that the plaintiff (as settlor or grantor) did not have standing, under either the AUTC [Alabama Uniform Trust Code] or the common law, to pursue a claim for rescission or reformation. The plaintiff presented arguments to support his position to the contrary, but the defendants addressed the plaintiff’s contentions and set forth arguments and authority that clearly refuted the plaintiff’s assertions. Accordingly, to the extent the trial court entered the summary judgment on the ground that the plaintiff did not have standing to pursue claims for rescission and reformation, it correctly concluded that the defendants had established that the plaintiff did not have standing to pursue those claims.

Ms. **34-35.

The Court further holds the summary judgment was appropriate because Jeremy

… did not present any evidence, much less substantial evidence, to establish that Lynda [Jeremy’s late wife and initial trustee of the trust] had engaged in any fraudulent or inequitable conduct that resulted in his alleged misunderstanding, and he did not present any evidence indicating that Lynda had been aware of his alleged misunderstanding. Also, the plaintiff did not present substantial evidence to establish that the mistake was not mixed with his own negligence. Rather, by his own testimony, the plaintiff admitted that he did not read the Trust agreement before he signed it; that he might have skimmed the Trust agreement; that he did not ask Burwell [the attorney who drafted the trust agreement] any questions about the provisions of the Trust; and that he instead relied on comments made by his business partner about the effects of his own separate trust.

Ms. **50-51.

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