Strauss v. Strauss
2011 Pa. Super. 159 (2011)
By Andrew Taylor
On August 1, 2011, a three-judge panel of the Pennsylvania Superior Court decided an issue of first impression relating to the marital characterization of proceeds from the settlement of a will contest. While the general rule is that proceeds from an inheritance are non-marital, and the proceeds from a lawsuit are marital (if the cause of action accrued during the marriage), an interesting issue arises when an inheritance to a spouse is paid though the settlement or litigation of a lawsuit contesting a will.
In Strauss, Husband and Wife were married in 2000. In 2005, Husband’s father died testate, leaving Husband and his brother approximately $230,000. It was discovered that, shortly before Husband’s father’s death, he executed a will leaving $3,000,000 to several charities, substantially reducing Husband’s and his brother’s shares in the estate. Husband and his brother filed an action contesting the will prior to commencement of the divorce action between Husband and Wife.
In December 2006, the will contest was settled, whereby Husband and his brother each received $150,000. Husband and Wife separated and Husband filed a Divorce Complaint in 2007.
The trial court judge in the Court of Common Pleas of Bucks County determined that Husband’s share of the will contest settlement ($130,000 after counsel fees) constituted marital property and awarded Wife one-half of the same. In reaching its decision, the trial court reasoned that the money received by Husband was marital because the cause of action accrued at Husband’s father’s death, which was during the marriage. Further, the trial court held that the claim involved a lawsuit. Husband appealed that decision to the Superior Court.
The Superior Court found that this issue was a matter of first impression; specifically, whether proceeds received by an heir-at-law as settlement of a will contest become marital property, and therefore subject to equitable distribution, pursuant to the Pennsylvania Divorce Code. In a published decision, the Superior Court reversed the trial court and found the proceeds to be non-marital.
In reversing, the Superior Court held that Husband was of the small class of individuals (he and his brother) who could challenge the 2005 will. Stated otherwise, Wife did not have standing to challenge her father-in-law’s will, either as an individual or a spouse. Further, and perhaps more importantly, the monies received by Husband were distributed through the estate (Husband and his brothers were residuary beneficiaries) and, as such, constituted an inheritance, which is generally non-marital under Pennsylvania law.
In summary, the Superior Court was not persuaded that the will contest was a lawsuit resulting in proceeds derived from a cause of action, like, for example, a tort claim. Instead, the will contest was nothing more than a disputed inheritance.
Andrew D. Taylor is a partner in the Norristown office of Weber Gallagher Simpson Stapleton Fires & Newby LLP. He focuses his practice exclusively in family law and practices in Montgomery and all surrounding counties. He is an active member of the Family Law Sections of the Pennsylvania Bar Association and Montgomery Bar Association.