Dudek v. Dudek is a case that boils down to the creation of a trust. This is the story. One brother, JD, took out a life insurance policy and at the same time created an irrevocable trust with the only assets being the policy and $100. He made David, another Dudek brother, the trustee and beneficiary. Unfortunately, JD messed up the paperwork to the life insurance company and the asset was not put in the trust. Two years later JD gets cancer and receives two bone marrow transplants from David which extend his life. However, just prior to JD’s death, other family members gathered and urged JD to eliminate David and make them the beneficiaries of the policy directly through the insurance company.
JD died and the insurance money was distributed to the other siblings. David filed a suit to get the money back. His case was dismissed based upon a demurrer (That means that the other side asked the court to assume all facts are true, if everything David alleges is true and there he still has no case according to the trial judge, the judge dismisses the case). The trial court said that there was no gift and so no trust and dismissed David’s case. David appealed.
Which Dudek inherits?
The court of appeal dug deep. They went beyond probate code to property law. They asked the question, “What is a gift?” According to California Civil Code, “A gift is a transfer of personal property, made voluntarily, and without consideration.” (Civ. Code, § 1146; 13 Witkin, Summary of Cal. Law (11th ed. 2017) Further, “Three things are necessary for a valid gift: (a) There must be an intent, on the part of a donor having capacity to contract, to make an unconditional gift. There must be an actual or symbolical delivery, such as to relinquish all control by the donor. The donee must signify acceptance, except where it may be presumed.” (13 Witkin, Summary of Cal. Law (11th ed. 2017) Personal Property, § 134, p.142.)
The Court of Appeal said that the insurance policy gift was a valid gift at the time it was given and, hence, the trust is owned solely by David. It did not matter that the gift was given away to others prior to JD’s death because the gift was already given to David. However, the Court went further, if all the facts alleged by David are to be believed, he not only owns the trust and insurance money but is able to bring the suit against the proper parties to reclaim the money.
Judgement reversed. David of Dudek v. Dudek will live to fight another day.