Those of us from large firms sometimes read opinions where solo practitioners take a shot at an issue and force us to take notice. The facts in this Bucks County case litigated by a solo practitioner against a two lawyer firm are easy.
Woman has a child in 1987.
Woman and man marry in 1990. Child is never adopted.
Woman filed for divorce in 2009 but never prosecutes or withdraws it. Couple stays together.
Woman’s child dies in 2017 with a $3,400 IRA and four life policies which pay $633,000.
Three months after the child’s death the parties separate a second time and wife reinstated her divorce.
When he dies at age 30, Johanna Goodwin’s son leaves no will but his mother is named the beneficiary of both the life policies and the IRA. Husband Scott Goodwin asserts that this is property “acquired by either party during marriage” as that term is defined by 23 Pa.C.S. 3501(a). Johanna’s counsel responded that it should be excluded as something acquired as a “gift, bequest, devise or descent or property acquired in exchange for such property.” Section 3501(a)(3).
A small twist of little significance. When Johanna received the insurance proceeds she applied them to acquire a home titled in her name. It seems the funds were never co-mingled into any form of joint account.
This writer first read the case and thought this was a slam dunk for mom. But it doesn’t take a deep dive to realize that a “gift” requires donative intent, delivery and acceptance of the gift while the son was alive. Clearly that did not occur. Son owned the life insurance and the IRA right to the moment of his untimely death at 30. The property did not come by way of a will, devise or bequest nor did it come by way of intestate descent. Both the IRA and the insurance were third party contracts where mother was named as the donee beneficiary. So technically the property did not fall directly into the “gift” bucket of 23 Pa. C.S. (a)(3). Husband’s counsel decided that with $635,000 at stake, it was worth seeing if he could get a court to agree that this money was “acquired by either party” during the marriage.
Unfortunately, the best that can be said is it was a valiant try. Unfortunately, the Supreme Court cites the trial court findings that there was no adoption and husband was never on any beneficiary designations in holding that third party contracts naming donee beneficiaries are effectively recipients of inchoate gifts which remain revocable until death seals their fate. It runs the circuit of other states to find that Florida, Idaho, Iowa, Colorado, Kentucky and Minnesota all seemed to follow the same principle unless the money was “co-mingled” into a joint account. It distinguishes Rohrer, 715 A.2d 463, 467 (Pa.S. 1998) because in that case marital income was employed to pay for a life policy on an elderly person’s life even though only one spouse was the death beneficiary. Here, the policies and the IRA were funded exclusively by the wife’s child.
Acknowledging there is a gap in the law between the law of estates and that of equitable distribution the Court decides that the weight of authority and of legislative intent suggests that the “donor” intended a post-mortem gift. But had there been an adoption, or a prior designation of mom and step-dad as beneficiaries, the pendulum might have swung the other way.
Goodwin v. Goodwin, 70 MAP 2021 (8/16/22)