Oral Trust Not Established – Bank Accounts – Joint Tenants

Chiepalich v. Chiepalich, [Ms. SC-2023-0191, Aug. 11, 2023] __ So. 3d __ (Ala. 2023). The Court (Mitchell, J.; Parker, C.J., and Shaw, Bryan, and Mendheim, JJ., concur) affirms a summary judgment by the Mobile Circuit Court dismissing claims asserted by Christopher S. Chiepalich (“Chip”) against his brother Stephen W. Chiepalich (“Steve”) alleging that Steve had wrongfully prevented Chip from inheriting assets in two bank accounts owned by their mother Jayne whose will left the residue of her estate to Chip and Steve.

The Court affirms the summary judgment on conversion because Chip “has not shown an interest in either account.” Ms. *10. The Court rejects Chip’s argument that Jayne transferred a Merrill Lynch account to Steve in Trust. The Court explains “‘[A] trust need not be evidenced by a trust instrument, but the creation of an oral trust and its terms may be established only by clear and convincing evidence.’” §19-3B-407, Ala. Code 1975. The Court concludes “[n]o reasonable fact-finder could find that this evidence clearly and convincingly established that Jayne intended to create a trust.” Ms. *13. The Court also noted that Jayne “signed a gift-tax return ‘[u]nder penalties of perjury’ ....” Ibid.

The Court concludes “Chip has not shown reversible error as to conversion of the Trustmark account,” Ms. *15, because Steve was a joint tenant and “‘upon the death of one joint tenant, his interest shall pass to the surviving joint tenant ....’” Ms. *14, quoting § 35-4-7, Ala. Code 1975.

The Court also affirms the dismissal of Chip’s clams of fraud and undue influence. As for fraud, the Court explains “Chip notes that Steve ‘represented to [Jayne] that transferring [the Merrill Lynch account] to him would not alter the terms of the Will.’ .... But this statement was true – the transfer did not modify the terms of the will.” Ms. *16.

As to undue influence, the Court explains

“It is well settled that one alleging dominance of a child over a parent must prove that ‘time and circumstances have reversed the order of nature, so that the dominion of the parent has not merely ceased, but has been displaced, by subservience to the child.’” Wilson v. Wehunt, 631 So. 2d 991, 993 (Ala. 1994) (citation omitted). Accordingly, to shift the burden, the party seeking to establish undue influence must provide substantial evidence “that the parent’s will has become subordinate to the will of the child.” Id.; see also Furrow, 13 So. 3d at 354 (“[T]he circumstantial evidence offered to show dominance must nevertheless be substantial evidence.”).

Ms. *18. “Jayne voluntarily gave Steve ‘control’ over investment decisions, which he undisputedly exercised in conjunction with Jeffery’s recommendations. Chip has thus failed to rebut the presumption that Jayne was the dominant party and shift the burden to Steve.” Ms. *19.

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