The recent deaths of Anthony Bourdain and Kate Spade have alerted the public to legal issues that can arise when a loved one dies in the midst of a divorce or a legal separation. These same issues have been popping up in my practice over the last year, and so I wasn’t as surprised as some to learn that legal battles may be on the horizon for these estates in the wake of these celebrity deaths.
In two cases last year, I represented the children of the decedent. In one case, Case A, my client was the decedent’s child from his first marriage. In the other, Case B, my client was decedent’s child from a woman that he had an on-again, off-again relationship with throughout his life, having divorced her twice prior, and was on his third marriage to the woman. In Case A, the surviving spouse and decedent had been married less than a year, but also had an adult child together. Surviving spouse had left the decedent three months prior to his death and had been the one to petition for divorce. In Case B, the decedent and his spouse had not been living together for months, and in the week prior to his death, his spouse had taken him to court for an ex parte order for protection, which she ultimately lost as baseless. In both cases, the animosity between the decedents and their spouses was strong and palpable.
Here, I had two cases. The decedent died on a Friday before his divorce hearing the coming Monday of a sudden heart attack. It was expected that the divorce would be finalized on that hearing date. Had he made it just three more days, the outcome would have been completely different.
Two months after his wife left him and petitioned for divorce, but just five weeks before he died, he changed the beneficiary on his life insurance policy to my client, his oldest child. His younger child with the current spouse was in and out of legal battles involving alleged theft and drug crimes and though he had offered to help this kid, the kid moved out and rejected decedent’s offer. Decedent then disowned this kid, and left the entire insurance benefit to my client. The insurance beneficiary change form was executed in front of two witnesses, one of which was completely disinterested. Upon his death, my client filed a claim with the insurance company only to discover that spouse’s attorney sent a letter to the insurer claiming that spouse was entitled to the policy because the beneficiary claim form had been forged. This false allegation by spouse led to the insurance company filing an interpleader – which is a civil case whereby the insurer deposits the insurance proceeds into the court registry and allows the two competing claimants as defendants to fight over who will get the proceeds. Ultimately, my client received the entire policy amount, as well as damages on her cross claim against the spouse for defamation. The defamation claim stemmed from the fact that spouse had made several public statements around town about my client forging the beneficiary change form, which we were able to prove false.
The second case was the probate estate itself. Spouse petitioned the court to be appointed administrator of the estate, which we contested and requested the appointment of a neutral third party instead. The public administrator was appointed as the personal representative. Under Missouri laws of intestacy – when someone dies without a will – when the decedent leaves a spouse and children not of the current marriage, the spouse gets 50% of the estate, and the children split the remaining 50% of the estate equally. In this instance, my client was a 25% heir at law of the estate. Typically, the spouse is entitled to three things in addition to her share of the estate: (1) a homestead allowance (which is up to $15,000 of the primary residence or $15,000 cash, whichever is greater); (2) exempt property (basically, wedding ring, books, family bible, one vehicle, musical instruments, and the appliances in the home); and (3) a family allowance (normally equivalent to the amount of money the decedent would have contributed to the household for the support and maintenance of the family left behind to get the family by in the year immediately following death). The homestead allowance was a gimme that my client had to stomach, as was the exempt property. The real battle came in when the surviving spouse went after the family allowance. She filed her application for the allowance more than a year after the decedent died.
Because the purpose of the family and/or spousal allowance is to support the surviving spouse for the year immediately following decedent’s death, it must be filed as soon as is reasonable after decedent’s death. RSMo. 474.260; In re Estate of Guthland, 438 S.W.2d 12 (Mo. App. E.D. 1969). In Guthland, the widower applied for his spousal allowance far more than a year after his spouse’s death, and the distributees – children from a prior marriage – objected to the allowance. The widower argued that he was applying for the allowance after the property in the estate was subject to partition, but before the assets were distributed, so the application for allowance was timely. The appellate court disagreed, quoting from precedent, “the [surviving spouse] does not have unlimited time in which to demand her allowance as widow. What she is asking for is a money allowance in lieu of grain, meat, and other provisions granted by the statute out of the estate of a decedent for the support of his widow and children for 12 months. We think the allowance must be applied for within the 12 months; but, if not, undoubtedly it would have to be applied for, like the other allowances to the widow, before the personal property is distributed or sold.” Id. at 16, citing Howard v. Strode, 106 S.W. 116, 120 (Mo. App. 1907) (emphasis added). The court noted that the circumstances dictate what is reasonable within each unique case, however, there is only one case cited to where such an application was filed beyond one year from the date of death and that case involved a surviving spouse who was incapacitated at the time of her husband’s death, who died within ten months of her husband, and whose estate applied for the application on her behalf one year and a few days after husband’s passing. In re Estate of Guthland, 438 S.W.2d at 16-17.
We argued that there were no such extenuating circumstances here; indeed, the spouse here was well aware of her expenses during the year immediately following the death, because she had filed a claim against the estate prior to the one year anniversary of the death, requesting reimbursement for utilities. The Guthland court noted that, “[n]o case has been cited to us, nor has our research disclosed one, where as occurred here, an application filed 12 years after letters of administration were granted has been held to have been filed within a reasonable time.” Id. In reversing the probate court’s granting of the spousal allowance in Guthland, the appellate court pointed out that, “since the purpose and intent of the statutory provision was to provide temporary maintenance for such dependents for the period immediately following the decedent’s death, it would be illogical and unsound to hold, as the widower here advocates, that an application for an allowance has been filed within a reasonable time even though many years had passed since the widower was in need of such temporary maintenance.” Id. at 17. This is because “laches or an unreasonable delay will usually have the effect of defeating the right, especially if the tardy assertion of the claim would cause embarrassment and difficulty in settling the estate or unduly prejudice intervening rights.” Id.
Despite those arguments applying in Case A, the judge ruled against us and awarded the spousal allowance to the spouse here. The judge complained that Guthland was “old law” and “no one follows that anymore”. I had also argued the principle of spousal abandonment, because the spouse here had initiated the separation, moved out, and filed for divorce. The judge’s rationale in rejecting that argument was also no different.
However, six months after losing these arguments, the Heilcase was handed down by the Missouri Court of Appeals for the Western District. There, the son of decedent argued that RSMo. 474.140, spousal abandonment, should prevent the estranged spouse from obtaining her elective share from the estate. The couple had lived apart for about 14 years, but had never taken steps to formally terminate their marriage. The spouse argued that in order to find abandonment, there needs to be a showing of spousal misconduct, and none existed in that case. The court interpreted the statute, and held that misconduct isn’t required. What is required is to show that (1) there was a marriage, but (2) spouse voluntarily left the decedent, (3) that she left without reasonable cause, (4) she lived apart from the decedent for an entire year preceding death, and (5) because of this, she effectively abandoned the decedent. The critical factor is that there be a showing that of “an intention on the part of the one charged with it to give up completely the relation of husband and wife with no intention to resume it.” Consensual separation can satisfy that last critical element if evidence is clear that the surviving spouse exhibited no intent to resume her marital relationship. While the facts in Case A demonstrated the spouse had lived apart from decedent for less than a year, the critical element of her intent to permanently sever the marital relationship was clear due tot he filing of divorce. Had this hearing occurred six months later after Heil, the outcome may have been different.
In this second case, decedent went to court on the ex parte order for protection filed by his estranged spouse, won his defense, and then went to work to remove his wife as the beneficiary on his life insurance policy. He died five days later, suddenly and unexpectedly. His children filed a death benefit claim with the insurer, which their mother contested, alleging that since illegal substances were found in decedent’s system at time of death, he must have been under the influence when he changed the beneficiary designation. The insurance company also filed an interpleader, depositing the money with the court for mother and kids to fight over. However, there was no evidence that decedent was under the influence at the time the beneficiaries were changed, and so my clients also won this interpleader…but attorney’s fees for the insurer’s attorney were taken off the top of the death benefit before the proceeds were distributed to the children.
These cases demonstrate some important lessons. First, if a couple separates, they should immediately consult a skilled estate planner. Sometimes the divorce process could prohibit changes to estate plans or beneficiary designations until the divorce process is final, so separated individuals need to consult with their lawyers to determine what is permitted.
If changes can be made, they should be done with plenty of disinterested witnesses (witnesses who stand to gain nothing from the changes) and before a notary, with all the formalities followed. Beneficiary designations and changes should be made to as many assets as is permitted; life insurance policies, IRAs and investment accounts, bank accounts, vehicle titles, and real estate should all be considered.
If changes do not occur, and the decedent dies while separated but not formally divorced, Missouri law will only step in to prevent the surviving spouse from inheriting and benefitting from the decedent’s estate in certain circumstances that are generally fact intensive and will often require thousands of dollars in legal fees to litigate.
If the divorce is finalized, RSMo. 461.051 will likely apply to prohibit beneficiary designations – like transfer on death, pay on death, and bequests in a will – to be invalidated due to the divorce. Estate of Matthew McWilliams v. Mayer, SD35007 (April 23, 2018). But its best not to rely on courts to make these changes for you.