Probate

Annual Estate Planning Forum Survey

The TBA Estate Planning & Probate Executive Council welcomes opinions about the Annual Estate Planning Forum. Completing this brief web form will assist in ensuring the forum remains timely and relevant. We welcome feedback regarding subject matter, length, location, etc. Please respond to this survey by Oct. 5. Your help and participation are greatly appreciated!

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Changing a Life Insurance Beneficiary in Violation of an Injunction

 

Note: This article first appeared in the September 2018 Tennessee Bar Journal, in the "Family Matters" column.

 
In the recent Tennessee Supreme Court opinion issued in June 2018, Coleman v. Olson, the court dealt with the issue of an alteration of the beneficiary of a life insurance policy during the pendency of a divorce. Family law practitioners should take note of this case as it provides the clearest guidance available when dealing with a similar issue going well beyond the mere statutory language in its analysis of such situations.
 
The Tennessee Code provides that, once a divorce complaint is filed, the parties are generally prohibited from, among other things, making major financial alterations to the marital estate.[1] The Code contains a section specifically prohibiting either party from making a change to any insurance policy stating both are enjoined “from voluntarily canceling, modifying, terminating, assigning, or allowing to lapse for nonpayment of premiums, any insurance policy, including, but not limited to, life, health, disability, homeowners, renters, and automobile, where such insurance policy provides coverage to either of the parties or the children, or that names either of the parties or the children as beneficiaries without the consent of the other party or an order of the court. ‘Modifying’ includes any change in beneficiary status.”[2]
 
In the Coleman case, this exact scenario occurred. After the parties filed for divorce, Ms. Olson was diagnosed with a serious illness. Upon learning of her diagnosis, Ms. Olson changed the beneficiary of her life insurance policy from that of her current husband, Mr. Olson, to her mother Ms. Coleman. Prior to the disposition of the divorce, Ms. Olson died and, subsequently, Mr. Olson sued Ms. Coleman for the life insurance proceeds from Ms. Olson’s policy. Prior to making its way to the Tennessee Supreme Court, the trial court determined that Ms. Olson had intended to make her child, who was the contingent beneficiary of the policy, the primary beneficiary and had inadvertently made her mother the primary beneficiary.[3] Based on that finding and the determination that the primary purpose of the statutory injunction is to maintain the status quo of the parties until the disposition of the divorce, Ms. Olson’s decision to change the beneficiary to her child was proper despite violating the injunction since her decision to do so was not contemptuous of the order.[4] Further, citing its equitable power, the trial court determined that it was in the best interest of the Olson’s minor child for Ms. Coleman to be awarded the proceeds of the insurance policy and to have these funds deposited with the court for the future benefit of the child.[5]
 
On appeal, the Court of Appeals determined that it had the equitable power to “remedy the violation of an injunction after the abatement of a divorce action by considering the equities of the parties” and, based on this reasoning, determined that Mr. Olson should have been entitled to the proceeds of the life insurance policy as an equitable remedy to Ms. Olson’s violation of the statutory injunction.[6]
 
The Tennessee Supreme Court, in addressing the case, first determined that the factual determination of the trial court that Ms. Olson intended to name her child as the beneficiary of the insurance policy was not supported by the evidence presented, nor was it relief that either party to the suit was seeking.[7] The Supreme Court further determined that, while Ms. Olson clearly violated the statutory injunction, it was equally clear that, upon her death, the pending divorce action was then abated leaving the question of what remedy was then available, if any, to Mr. Olson against Ms. Coleman in a separate action.[8] Though this presented a case of first impression for Tennessee, the Supreme Court cited numerous sister jurisdictions for the proposition that even after abatement of a divorce action, the trial court could, when crafting a remedy to a violation such as the one Ms. Olson committed, exercise its powers to consider the equities of the parties.[9] The court did note that there were several jurisdictions that adopted the position that abatement of the divorce action ended the jurisdiction of the court, but Tennessee elected to take a flexible approach and determined the Court of Appeals was correct in determining that trial court could craft an equitable remedy to rectify the harm done by the violation of the statutory injunction.[10] The matter was remanded for further consideration of the equitable positions of Mr. Olson and Ms. Coleman based on further presentation of relevant evidence on the matter by the parties before the trial court.
 
Though this situation may seem like a very narrow ruling on a narrow issue, violations of the statutory injunction are far from uncommon. It is worthwhile for a practitioner to be aware that, if such a violation occurs and there is an abatement of the divorce, one ought to be prepared to defend the position of their client, on either side of the violation, against an equitable remedy favoring the other party. However, this ruling could have further implications regarding the purpose of the statutory injunction in general.
 
While not yet knowing the outcome of the Coleman matter upon remand, it is not hard to see that permitting equitable redress of these types of violations might take the sting out of powers of the court to curb such behavior as a trial court may determine, from an equitable viewpoint, that the interests of the estate of the violator demand consideration where before there would have been none. Also, there is nothing in this line of reasoning by the Supreme Court that limits its applications to life insurance proceeds only, or even to Tenn. Code Ann. § 36-4-106(d)(2). A trial court now seems justified in dealing with a party in violation of the statutory injunction upon equitable lines regardless of the willfulness of their conduct. Further, a question arises of whether the ruling in Coleman requires the consideration of equitable positions when remedying a violation. A close reading of the case seems to indicate the court’s entire purpose in taking up this issue is to vest a trial court with “the authority to ‘right a wrong’ and remedy an injustice based on equitable considerations”,[11] but there is nothing that requires the trial court to determine that the “wronged” party deserves, in equity, to have relief. In the Coleman matter, the trial court may determine, in equity, Ms. Coleman as the representative of Ms. Olson’s estate is entitled to some of the proceeds based on a need related to the minor child despite the clear violation of the injunction by Ms. Olson. Still, based on the approach of other states, Mr. Olson would have had no remedy at all and, based on this decision, he now does.
 
Despite the fact that these situations arise infrequently, it is certainly a facet of the law of which a family law practitioner should be aware. If presented with a situation where there has been a violation of the statutory injunction and then the divorce is abated by the death of the party in violation, you are not without remedy. You can and should proceed against the estate of the deceased party to have the trial court remedy the violation.
 
Notes
1. Tenn. Code Ann. § 36-4-106(d).
2. Tenn. Code Ann. § 36-4-106(d)(2).
3. Coleman v. Olson, P. 7 (Tenn. 2018).
4. Id., page 7.
5. Id., page 7.
6. Id., page 8
7. Id., page 10.
8. Id., page 11; see Blackburn v. Blackburn, 270 S.W.3d 42, 47 (Tenn. 2008).
9. Id., page 12.
10. Id., pages 12-13.
11. Id., page 12.

MARLENE ESKIND MOSES is the principal and manager of MTR Family Law PLLC, a family and divorce law firm in Nashville. She is a past president of the American Academy of Matrimonial Lawyers. She has held prior presidencies with the Tennessee Board of Law Examiners, the Lawyers’ Association for Women and the Tennessee Supreme Court Historical Society. She is currently serving as a vice president of the International Academy of Matrimonial Lawyers. The National Board of Trial Advocacy has designated Moses as a Family Law Trial Specialist.
 
MANUEL BENJAMIN RUSS earned a bachelor of arts from Johns Hopkins University, a master of arts from University College London, and a law degree from the Emory University School of Law. He is in private practice in Nashville focusing primarily on criminal defense.

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Aretha Franklin's $80 Million Estate in Limbo

If recent history is an indication, Aretha Franklin’s estimated $80 million estate could be in for a contentious battle, according to Rolling Stone. The Queen of Soul left no will when she died, so according to Michigan law, her estate should be evenly divided among her four adult sons: Ted White Jr., Kecalf Franklin, Edward Franklin and Clarence Franklin. However, the possibility of unreleased music, royalty streams and the likelihood of numerous financial accounts increases the likelihood of this being contested in court. 

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Judge Expands Administrator's Powers for Glen Campbell Estate

In the battle over Glen Campbell's estate, Judge David "Randy" Kennedy has expanded the powers of the estate’s administrator while also ordering a detailed accounting of a joint bank account Campbell maintained with his wife, the Tennessean reports. This development comes after Stanley B. Schneider — who serves as the estate’s administrator and was formally Campbell's business manager — petitioned the court for the power to pay taxes and other estate obligations. Under the order, Schneider is required to determine what funds in the account are considered community property with Kimberly Campbell and what funds belong to the estate. 

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Anthony Bourdain Leaves Bulk of Estate to Daughter

Celebrity chef and TV host Anthony Bourdain, who died by suicide in June, left most of his estate to his 11-year-old daughter, Ariane Busia-Bourdain, reports the Chicago Sun-Times. Bourdain named ex-wife Ottavia Busia executor of the $1.2 million estate, which is far below previous estimates of his net worth. Some reports claim that the Bourdain/Busia divorce was not finalized, which could open the estate up to a legal dispute.

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Michael S. Goode to Chair Estate Planning & Probate Section for the 2018–19 Bar Year

Michael S. Goode has dedicated his legal career to helping businesses and families with their tax, business and estate planning needs, working closely with advisors, banks and trust companies to provide innovative solutions to clients' wealth preservation needs. Goode co-founded the Chattanooga chapter of the Succession Planning Professionals and is a member of the Atlanta chapter. Goode has also written pension legislation under Georgia law for a large county school district and represented an estate client before the Supreme Court of Georgia in a case that caused a shift in Georgia law regarding the interpretation of Wills. Goode received his JD from The College of William and Mary, and his LL.M. in Taxation from New York University. Please join us in welcoming your Estate Planning & Probate Section Chair for the 2018–19 bar year.

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Maryville Attorney Suspended for Three Years

A former Blount County commissioner was suspended Tuesday from practicing law for three years, reports the Citizen Tribune. The Board of Professional Responsibility has suspended Ted Austin “Tab” Burkhalter Jr., regarding a probate case in which he represented the executor of an estate, in which notarized a document with a forged signature. Burkhalter operates Burkhalter & Associates, serving as its managing partner.

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How the Tax Cuts and Jobs Act of 2017 Affects Estate Planning

A recent article on Lexology highlights changes to estate and gift taxes in the Tax Cuts and Jobs Act of 2017, which doubles those ‘death tax’ exemptions. The exemptions will continue to be adjusted annually for inflation and are set to expire in 2025.
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Another Successful Estate Planning & Probate Forum!

The TBA Estate Planning & Probate Section presented its annual forum to a packed house at the Embassy Suites in Franklin on Feb. 23. Through the dedication of the section and top-notch programming, this event has become a staple for not only estate planning and probate practitioners, but lawyers of associated practices as well. Thanks to the TBA Estate Planning & Probate Executive Council for their time and assistance with another remarkable forum. Stay tuned for more exciting events to come from this section!

OFFICERS
  • Jennifer Exum, Chair, Chambliss, Bahner & Stophel, Chattanooga
  • Michael Goode, Vice-Chair, Stites & Harbison, Nashville
  • Jeff Carson, Immediate Past Chair, Diversified Trust, Nashville
MIDDLE TENNESSEE DELEGATES
  • Paul Hayes, Howard Mobley Hayes & Gontarek, Nashville
  • David Parsons, Attorney at Law, Nashville
WEST TENNESSEE DELEGATE
  • Chris Coats, Baker, Donelson, Bearman, Caldwell & Berkowitz, Memphis
EAST TENNESSEE DELEGATES
  • Victoria Tillman, McKinney & Tillman, Knoxville
  • Donald Farinato, Hodges, Doughty & Carson, Knoxville
  • Newman Bankston, Egerton, McAfee, Armistead & Davis, Knoxville
  • Angelia Nystrom, University of Tennessee Foundation, Knoxville

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Elate & Libate

The Estate & Probate section will host an "Elate & Libate" cocktail hour immediately following the Estate Planning & Probate Forum 2018 in the Embassy Suites Franklin Atrium. Join friends, colleagues and fellow section members for a drink on us!
 
What better way to relax and unwind after a full day of CLE fun. Drink tickets will be provided for TBA Estate Planning & Probate Section members. Forum participation not required to attend the happy hour. Contact Jarod Word for more info. 
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