Connecticut General Life Insurance Co. v. First National Bank of Minneapolis
262 N.W.2d 403 (1977)

  • Aughenbaugh got a life insurance policy from Connecticut General.
  • Later he wrote a new will creating a revocable trust. First National was named as the trustee.
    • The trust was the beneficiary of the life insurance policy, and Aughenbaugh’s wife Elizabeth and three kids were named beneficiaries of the trust.
  • Aughenbaugh divorced Elizabeth and married Marilyn. He wrote a new will that had a clause “superceding and canceling any previous wills or trusts.”
  • Aughenbaugh died. Marilyn tried to get the insurance money from Connecticut General. They balked and instituted an interpleader to determine who should get the insurance money.
    • The insurance policy had never been changed, but if the trust that was to be the beneficiary was revoked, then the insurance money would pass via intestate succession to Marilyn.
  • The Trial Court found that the new will did not revoke the trust. Marilyn appealed.
  • The Minnesota Supreme Court affirmed.
    • The Minnesota Supreme Court noted that a testamentary trust can be revoked without notice and revocation is implied if the settlor gets a divorce.
      • However, an inter vivos trust is not revoked in similar circumstances.
    • The Minnesota Supreme Court found that a revocable life insurance trust such as this one was an inter vivos trust.
    • The general rule is that if a settlor has the power to revoke a trust by transaction while they are still alive, then they cannot revoke that trust by writing a new will.
      • In this case, Aughenbaugh did not provide any written notice to either Connecticut General or First National that the trust was revoked.
        • The original trust document specifically gave Aughenbaugh the right to revoke the trust by written instrument. He didn’t follow his own rules.
  • If she had lost, Elizabeth could have potentially argued that the beneficiaries were a class, and as such, when Elizabeth was removed, her share would be split among the other members of the class (the children), which would still have left out Marilyn.