Crossover of Estate and Family Law: O’Hara v. O’Hara, 2016 N.J. Super. Unpub. LEXIS 409 (App. Div., Feb. 25, 2016)
O’Hara v. O’Hara, 2016 N.J. Super. Unpub. LEXIS 409 (App. Div., Feb. 25, 2016)
This case epitomizes the increasing overlap between estate and family law.
Emmaline and John O’Hara were married in 1955. They had two children, including a son, Kevin, from whom John was estranged.
John acquired substantial assets during the marriage, allegedly be valued at approximately $6 million. Although he and Emmaline separated for many years, he provided for her care and support.
In 2012 Emmaline filed for divorce. She was approximately eighty years old at the time. John believed she lacked the ability to manage her affairs and that the divorce was contrived by their son, Kevin, to have his father’s assets transferred to his mother for Kevin’s benefit.
The Family Part judge appointed a guardian ad litem (GAL) for Emmaline. The GAL later initiated a capacity proceeding in the Probate Part.
John challenged the GAL’s appointment and requested dismissal of the matrimonial matter. The Family Part judge denied that relief.
Thereafter, a psychologist concluded that Emmaline lacked the capacity to govern herself, manage her affairs, and understand or participate in the divorce proceedings.
John filed an answer in the matrimonial matter and a counterclaim to adjudge Emmaline mentally incapacitated and appoint him as her guardian. John also filed a third-party complaint on his and Emmaline’s behalf against Kevin, asserting a variety of claims (conspiracy, fraud, abuse of process, invasion of privacy, and intentional infliction of emotional distress).
Soon thereafter, on January 23, 2014, John executed a Last Will. The Will left Emmaline no property interest in the marital assets; rather, the Will created marital deduction trusts that only entitled Emmaline to income from the trusts during her lifetime, and permitted, but did not require, the trustee to pay principal as may be necessary for her support, maintenance and medical care. The trusts permitted the trustee to consider other financial resources available to Emmaline for those needs.
The Will also created a family trust for Emmaline’s benefit, which also permitted, but did not require, the trustee to distribute as much of the principal and income as the trustee in its discretion determined was necessary for her health, support or maintenance.
John specifically disinherited Kevin and explained why he did so.
During the matrimonial litigation, Emmaline asserted that John had not been forthright regarding the value of the marital assets. The court entered numerous orders compelling discovery, awarding pendente lite support and counsel fees to Emmaline, and imposing sanctions against John.
John died unexpectedly on April 27, 2014. At the time of his death, a request for a bench warrant was pending for his arrest.
After John’s death, Emmaline’s GAL dismissed the capacity proceeding. John’s Will was admitted to probate, and an executor and trustee were appointed.
The trial judge allowed Emmaline to file an amended complaint joining the Estate of John as a defendant and asserting a claim for a constructive trust. The judge found that although the Will provided for Emmaline, it did not guarantee her the rights she would have been afforded under the alimony and equitable distribution statutes. The judge also found that it was unclear whether the trusts could be funded and whether Emmaline would ultimately receive distribution of the income or principal from the trusts, particularly since the trustee had discretion to distribute the assets.
Emmaline filed an amended complaint. The Estate filed a motion to dismiss for failure to state a claim upon which relief can be granted. The Estate argued, in part, that a constructive trust was not proper because Emmaline was not disinherited; rather, she was the sole beneficiary of the trusts and there were no exceptional circumstances justifying equitable relief.
The trial judge denied the motion to dismiss the amended complaint, so that the matrimonial matter could proceed to determine the value of the parties’ assets and what would be available for equitable distribution. The trial court did not grant Emmaline a constructive trust; rather, she ordered the parties to proceed with discovery to determine whether to impose this equitable remedy.
The Appellate Division granted the Estate’s motion for leave to appeal, but affirmed the trial court’s denial of the motion to dismiss. The appeals court set out the general rules:
Equitable distribution is a statutory remedy that is available following the entry of “a judgment of divorce, dissolution of civil union, divorce from bed and board or legal separation from a partner in a civil union[.]” N.J.S.A. 2A:34-23(h). “[O]rdinarily, equitable distribution of marital assets arises only with the adjudication of divorce.” Carr, supra, 120 N.J. at 343. “[W]hen one spouse dies during the pendency of an action for divorce, the action is abated and statutory equitable distribution is unavailable.” Kay v. Kay, 405 N.J. Super. 278, 283 (App. Div. 2009), aff’d, 200 N.J. 551, (2010) (citation omitted).
Id. at 8.
Nevertheless, the Appellate Division explained that in exceptional circumstances, equitable relief, including constructive trusts, may be available in divorce actions following a spouse’s death prior to the entry of a final judgment:
Here, once Emmaline filed her complaint for divorce, she was entitled to equitable distribution of marital assets. John’s death did not diminish that right. See Carr, supra, 120 N.J. at 350. Thus, the court must determine the value of the marital assets, the appropriate equitable distribution, and whether the Estate would be unjustly enriched if it retained full interest in the marital assets. At this stage of the litigation, Emmaline has pled a cause of action for a constructive trust, and we must accept as true and give all reasonable inferences to her allegations that John had not been forthright about the value of the marital assets and the Will effectively disinherited her and extinguished her interest in the marital assets, thus unjustly enriching the Estate. Without discovery and a hearing, it cannot be determined whether a constructive trust is the appropriate equitable remedy.
Id. at 9-10.