Enforcement of a Property Settlement Agreement by a Decedent’s Estate

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Saling Litvin and Hambleton

A recent Chester County Reporter included an Opinion from the Honorable Katherine B. L. Platt, J., which dealt with a Petition for Declaratory Relief filed by the estate of a former spouse.  Within the Petition the Decedent’s children sought to recover life insurance proceeds which were paid by an insurer to the Decedent’s ex-spouse. In re Estate of David J. Wheeler, Deceased, 64 Ches. Co. Rep. 172 (2016).

Decedent and his prior spouse were married on May 11, 2012.  They executed a Marital Settlement Agreement (MSA) on July 10, 2014, and were divorced on August 19, 2014.  The MSA contained an alimony obligation which was secured against Decedent’s life insurance policy provided by PECO.  The MSA further provided that if Decedent/Husband died prior to June 1, 2015, ex-Wife would be entitled to the life insurance proceeds.  If he passed after that date ex-Wife would not be entitled to receive the proceeds.  Decedent/Husband died intestate on September 8, 2015.  He did not file a change of beneficiary between June 1, 2015, and his date of death.

Hartford Insurance Company distributed $342,000 to ex-Wife pursuant to the plan documents which named her beneficiary.  Pursuant to the Employee Retirement Income Security Act of 1974, 29 U.C.S.C. 1001, et. seq. (ERISA), the plan administrator was required to discharge its fiduciary duties in accordance with the plain language of the ERISA plan documents.  The Trial Court determined that Hartford properly distributed the insurance proceeds to ex-Wife.

However, the Trial Court determined that ex-Wife was not entitled to keep the proceeds.  As with most common MSA’s the document executed between Decedent and his ex-Wife contained a provision wherein each party waived and released “any and all right to receive insurance proceeds at the death of the other, whether named as beneficiary or otherwise…” Id., at 176. The scrivener of the agreement testified that both parties intended to waive all rights to insurance proceeds.  Moreover, the Court found that the MSA was not void upon the death of one of the parties.  A decedent’s estate may complete the contract and enforce the terms of a Settlement Agreement.  In re Estate of Bullotta, 838 A.2d 594, 597 (Pa. 2003). 

The Trial Court concluded that ex-Wife was not entitled to the proceeds from Hartford, and was directed to deposit the funds she received into the Decedent’s estate.

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