198 A.3d 1263
Vt.2018Background
- Married in 1973, separated in 2006; husband filed for divorce in June 2016 and died in September 2016.
- Husband rolled deferred-compensation funds (~$119,000) into an IRA in June 2015 and named his niece and nephew as co-primary beneficiaries; wife had previously been beneficiary of the deferred-comp account.
- Husband died testate; his 2001 will devised the residue to wife, and probate allowed the will; wife received personal estate and sole possession of the marital residence.
- Wife sued for declaratory judgment asserting the IRA beneficiary designation was void under 14 V.S.A. § 321 as a transfer made to defeat her spousal claim, and that the IRA should pass through the estate.
- Trial court granted summary judgment for defendants, reasoning that § 321 does not apply because wife took under the will (barred from electing statutory share), and that wife failed to prove fraudulent intent; wife appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 14 V.S.A. § 321 applies to void an IRA beneficiary designation made during marriage | Hayes: § 321 voids the designation because it was a transfer to defeat her spousal claim and the IRA was not effectively disposed of by will | Defs: § 321 targets statutory (intestate/elective) spousal shares; wife accepted benefits under the will and so cannot seek statutory share; also no fraudulent intent shown | Court: § 321 refers to elective/intestate statutory share; wife took under the will and therefore may not pursue § 321 relief; summary judgment for defendants affirmed |
| Whether the term “share” in § 321 includes a spouse’s testamentary (will) share or only statutory shares | Hayes: “Share” can include what would have gone to spouse under the will or where spouse was a beneficiary of the asset | Defs: “Share” means intestate or elective statutory share; § 321 sits in the survivors’ rights chapter referencing statutes for intestate/elective shares | Court: “Share” plainly refers to elective or intestate statutory share; not testamentary devise |
| Whether wife may claim the IRA by treating it as part of the estate not disposed by will (i.e., intestate with respect to IRA) | Hayes: IRA was not distributed by will and therefore passes by intestacy so § 321 should apply | Defs: Nonprobate beneficiary designations pass outside probate; wife’s remedy was to elect against the will if she sought a statutory share | Court: IRA passes by beneficiary designation under federal and state law principles; wife could only pursue elective share and she is barred because she accepted under the will |
| Whether summary judgment was appropriate on the fraud element of § 321 | Hayes: Effect of transfer shows intent to defeat spouse | Defs: Undisputed evidence (husband’s relationship with niece/nephew; provision for wife) fails to show fraudulent intent; intent cannot be presumed from effect alone | Court: Wife failed to establish fraudulent intent; summary judgment proper |
Key Cases Cited
- Thayer v. Thayer, 14 Vt. 107 (1842) (recognized widow’s statutory dower and held conveyances made to defeat widow’s rights are fraudulent and void)
- Dunnett v. Shields, 97 Vt. 419 (1924) (fraudulent intent cannot be presumed from the mere effect of a conveyance; plaintiff must prove intent)
- In re O’Rourke’s Estate, 106 Vt. 327 (1934) (one cannot take under a will and simultaneously elect against it; surviving spouse who accepts will is barred from statutory elective share)