Goodwin, J. v. Goodwin, S. ( 2020 )

J-A17027-20
2020 Pa. Super. 284
JOHANNA L. GOODWIN : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
SCOTT M. GOODWIN :
:
Appellant : No. 2338 EDA 2019
Appeal from the Order Entered July 22, 2019
In the Court of Common Pleas of Bucks County Family Division at
No(s): 2008-63956-DQRY
BEFORE: BOWES, J., McCAFFERY, J., and FORD ELLIOTT, P.J.E.
CONCURRING & DISSENTING OPINION BY McCAFFERY, J.:
FILED DECEMBER 14, 2020
Respectfully, I would reverse the trial court’s finding that Son’s life
insurance proceeds were a “gift,” and thus excluded from the marital estate,
within the meaning of Section 3501 of the Pennsylvania Divorce Code.1 In
light of this disposition, I would remand for the trial court to reconsider the
overall distribution scheme. However, I agree with the learned Majority’s
denial of relief on Husband’s claim that the trial court failed to properly
consider the Section 3502 factors for dividing marital property. Accordingly,
I concur and dissent.
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1 23 Pa.C.S. §§ 3101-3904.
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Husband’s first claim on appeal is that the trial court erred in finding
Son’s life insurance proceeds2 were marital property pursuant to Section 3501.
For ease of review, I first set forth the Divorce Code’s definition of “marital
property:”
(a) General rule.—As used in this chapter, “marital
property” means all property acquired by either party during the
marriage . . . . However, marital property does not include:
* * *
(3) Property acquired by gift, except between spouses,
bequest, devise or descent or property acquired in exchange
for such property.
* * *
(b) Presumption.—All real or personal property acquired by
either party during the marriage is presumed to be marital
property regardless of whether title is held individually or by the
parties in some form of co-ownership such as joint tenancy,
tenancy in common or tenancy by the entirety. The presumption
of marital property is overcome by a showing that the property
was acquired by a method listed in subsection (a).
See 23 Pa.C.S. § 3501(a)(3), (b).
I also consider the trial court’s discussion:
[T]he life insurance proceeds Wife received following her son’s
passing are not a bequest, devise, descent or any other form of
inheritance from [a] decedent. [I]t is well established that the
assignation of an individual as a life insurance beneficiary is a
mere expectancy. Knoche v. Mutual Life Inc. Co., [176 A. 230,
230-31 (Pa. 1934)].
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2 I separately consider Husband’s claim as to Son’s IRA proceeds infra.
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It is clear that the naming of a beneficiary on a life insurance
policy vests nothing in that person during the lifetime of the
insured[;] thus the funds were never in the possession of the
insured, [Son]. As a result, he cannot have given them as a gift
to his mother. As the funds were never in the possession of
[Son’s] estate, they cannot have been a testamentary gift either.
Rather, Wife possesses the funds from her son’s life
insurance polic[ies] because he assigned the expectancy of
those insurance contracts specifically to her alone. He did this
as a gift — voluntarily, “without consideration or compensation
as an incentive or motive for the transaction.” Bundy v. Wetzel,
184 A.3d 551, 556 (Pa. 2018). During her son’s life, Wife had no
legally protectable interest against him extinguishing this
expectancy in favor of another, because an expectancy is the
chance to obtain property from a living person and not in itself
property. Braman Estate, [258 A.2d 492, 493 n.3 (Pa. 1969)].
...
Trial Ct. Op. at 5-6 (emphases added).
On appeal, Husband asserts that under Section 6108(a) of the Probate,
Estates and Fiduciaries Code (PEC Code), the trial court properly found Son’s
life insurance and IRA proceeds were not a “bequest, devise, or descent”
pursuant to Subsection 3501(a)(3). Husband’s Brief at 30, 32, citing 20
Pa.C.S.A. § 6108(a) (the designation of a life insurance beneficiary is not
testamentary and shall not be subject to any law governing the transfer of
property by will); Henderson Estate, 149 A.2d 892, 894-95 (Pa. 1959) (life
insurance proceeds are not testamentary conveyances). Husband reasons
that under these same principles, the trial court should have found the life
insurance and IRA proceeds were likewise not “gifts” under Section
3501(a)(3), and thus should have excluded them from the marital estate.
Husband’s Brief at 39, citing Trial Ct. Op. at 5. Husband contends the court
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instead improperly “created a new exception” and “a legal fiction,” as “there
is no such thing as [an] insured making an ‘assignment of an expectancy as
a gift.’” Husband’s Brief at 23-24. “A mere expectancy is not an asset” that
can be delivered as a gift. Id. at 40-41. The court’s attempt to label the
naming of a beneficiary as “an assignment of an expectancy” and a “gift” do
“not change the nature of the transaction.” Id. at 45, 51. For the following
reasons, I conclude relief is due.
First, I agree with the Majority there is scant Pennsylvania law
addressing the situation at bar. See Majority Op. at 9-10. I would begin
review by examining the statutory language of Section 3501, as well as
Section 6108(a) of the PEC Code. This Court has stated:
In interpreting a statute, this Court must “ascertain and effectuate
the intention of the General Assembly. Every statute shall be
construed, if possible, to give effect to all its provisions.” 1 Pa.C.S.
§ 1921(a). To do so, we begin by considering the plain meaning
of the statute’s language. If the statute’s plain language is
unambiguous, we must apply it without employing familiar canons
of construction and without considering legislative intent.
Dubose v. Quinlan, 173 A.3d 634, 643 (Pa. 2017) (some citations and
footnote omitted).
As Son died while the parties were married, his life insurance and IRA
proceeds were presumed to be “marital property” pursuant to Section
3501(b), and to establish otherwise, Wife bore the burden of showing the
proceeds were acquired by a method set forth in Subsection (a). See 23
Pa.C.S. § 3501(a), (b). As stated above, Section 3501(a) excludes the
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following from marital property: “[p]roperty acquired by gift, . . . bequest,
devise or descent or property acquired in exchange for such property.” 23
Pa.C.S. § 3501(a)(3). However, as Husband points out, the Divorce Code
does not define the terms “bequest,” “devise,” or “descent.” See Husband’s
Brief at 29-30. The Statutory Construction Act of 1972 provides these
definitions:3
“Bequest.” — Includes devise and legacy.
* * *
“Devise.” —Includes . . . bequest and legacy when used as a noun.
* * *
“Legacy.” —Includes devise and bequest.
1 Pa.C.S. § 1991 (definitions); see Husband’s Brief at 29-30. The Merriam-
Webster dictionary defines “descent,” in part, as “transmission or devolution
of an estate by inheritance usually in the descending line.”
https://www.merriam-webster.com/dictionary/descent.
Section 6108(a) of the PEC provides: “The designation of beneficiaries
of life insurance . . . shall not be considered testamentary and shall not be
____________________________________________
3 Section 1991 prefaces the definitions with the provision: “The following
words and phrases, when used in any statute finally enacted on or after
September 1, 1937, unless the context clearly indicates otherwise, shall have
the meanings given to them in this section[.]” 1 Pa.C.S. § 1991.
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subject to any law governing the transfer of property by will.” 20 Pa.C.S. §
6108(a). This Court has stated:
It is clear that the naming of a beneficiary on a life insurance policy
vests nothing in that person during the lifetime of the insured; the
beneficiary has but a mere expectancy. Furthermore, the naming
of a beneficiary on a life insurance policy is sui generis; it is not a
conveyance of the insured’s assets.
Lindsey v. Lindsey, 492 A.2d 396, 398 (Pa. Super. 1985) (citations omitted).
See also Trial Ct. Op. at 5, citing Knoche, 176 A. at 230-31 (“Where the right
to change the beneficiary has been reserved in a life insurance policy, the
beneficiary named has but a mere expectancy with no vested right or interest
during the lifetime of the insured.”).
First, I agree with the trial court that Son’s life insurance proceeds were
not testamentary bequests, devises, or descents. See 20 Pa.C.S. § 6108(a).
I further agree that the life insurance proceeds themselves were not a “gift,”
for the reasons cited by the trial court: Son could not have gifted the proceeds
to anyone because “the funds were never in [his] possession.” See Trial Ct.
Op. at 5.
Pursuant to the same legal authority, however, I disagree with the trial
court’s conclusion that Son’s naming his mother as the beneficiary was a
“gift” pursuant to Subsection 3501(a)(3). See Knoche, 176 A. at 230-31;
Lindsey, 492 A.2d at 398. I would conclude that where “the naming of a
beneficiary on a life insurance policy . . . is not a conveyance of the insured’s
assets,” the naming of a beneficiary similarly cannot be a “gift” given by the
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insured to the beneficiary. See Lindsey, 492 A.2d at 398. Likewise, where
the beneficiary “has but a mere expectancy,” she cannot have received a
“gift.” See Knoche, 176 A. at 230-31.
I would thus conclude Husband’s first claim may be resolved by applying
the plain meaning of Section 3501 of the Divorce Code and Section 6108(a)
of the PEC. The plain language of Section 3501 and Section 6108(a) is clear.
As our statutes resolve this issue, I would not, as the Majority does, consider
how our sister states have resolved similar claims. Any exception or
accommodation in the statute must come from our legislature, and not by this
Court’s selective modification of how the statute should apply in certain
circumstances.
While I appreciate the trial court’s proper consideration of the particular
circumstances presented in this matter, as well as its endeavor to fashion an
overall equitable distribution scheme, for the foregoing reasons I would
reverse the trial court’s finding that, under Section 3501, Son’s life insurance
proceeds were a “gift” to Wife and thus excludable from the marital estate.
See Hess v. Hess, 212 A.3d 520, 523 (Pa. Super. 2019) (citations omitted);
Lindsey, 492 A.2d at 398. I would remand for the trial court to enter an
amended equitable distribution order.
Having addressed Husband’s claims as to Son’s life insurance
proceeds, I briefly address his arguments concerning Son’s IRA proceeds.
The Majority addresses these proceeds together with the life insurance
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proceeds, and similarly concludes they were a “gift,” excludable from the
marital estate, under Section 3501(a)(3). See Majority Op. at 8, 14. I note,
however, that while Husband avers Wife was the named beneficiary on this
IRA account, the trial court articulated no such finding. See Husband’s Brief
at 13-14, 16. Instead, the court simply stated that Wife “received [these]
funds from [Son’s] estate.” Trial Ct. Op. at 2; Order, 7/22/19, at 4. I would
thus direct the trial court to also determine whether Son’s IRA proceeds, “or
property acquired in exchange for” these proceeds, were marital property
pursuant to Section 3501.4 See 23 Pa.C.S. § 3501(a).
In his second issue, Husband avers the trial court erred in failing to
designate “a percentage to the equitable distribution scheme in its [July 22,
2019,] order,” as required by 23 Pa.C.S. § 3506. Husband’s Brief at 55. The
Majority denies relief on this claim, pointing out the trial court specified the
equitable distribution scheme in its Pa.R.A.P. 1925(a) opinion. Maj. Op. at
14. The Majority further construes Husband’s issue as “less a claim the
distribution scheme was unclear and more a claim Husband disagrees with the
treatment of the marital debt.” Id. at 15. I agree with the Majority’s
discussion that “[t]he trial court clearly concluded the debts were marital in
nature, notwithstanding Wife’s decision to pay them ‘with her separate
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4 I note Husband presents no challenge to the trial court’s disposition of Son’s
four Bank of America accounts.
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money.’” Id. at 16. Nevertheless, I would grant relief on different grounds:
because Son’s life insurance proceeds comprise a significant marital asset, I
would remand for the trial court to reconsider the overall distribution scheme.
Lastly, I agree with the Majority’s denial of relief on Husband’s final issue
— that the trial court abused its discretion and erred in failing to consider
some factors, and changing the meaning of other factors, under 23 Pa.C.S. §
3502(a). See Husband’s Brief at 61. I join that part of the Majority’s opinion.
See Majority Op. at 17-23.
For the foregoing reasons, I respectfully concur and dissent with the
Majority’s opinion.
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