The parties in a Divorce proceeding are usually concerned about custody and financial matters. Rarely do they think of what would happen if either one of them dies during the Divorce litigation. Yet, such an event may directly impact the surviving party’s financial entitlement.
To what extent will a court of equity protect the estate of a party who dies during divorce proceedings? In 2018, the New Jersey Court’s Appellate Division in Acosta-Santana v. Santana raised a myriad of questions for both matrimonial and estate planning attorneys.
In Santana, the husband passed away during the divorce proceedings before a settlement agreement was finalized. The parties had been married for 25 years when wife filed for Divorce. During the litigation, the husband executed a will, leaving most of his estate to his children. A few months later, the parties were circulating a draft property settlement agreement providing each would receive 50% of the marital assets. But before the agreement was reached, Mr. Santana died unexpectedly.
Mr. Santana’s estate filed a motion, and the wife cross-moved for summary judgment. Siding for the wife, the trial court reasoned that New Jersey’s equitable distribution statute does not authorize distribution of marital assets except upon divorce, and that there were no “exceptional circumstances” allowing the intervention of the estate in the matrimonial action, nor the establishment of a constructive trust for the benefit of the estate.
Previous to Santana, the courts recognized the risk to a divorcing spouse’s rights to his or her share, with no remedy for the surviving spouse, when death occurs during divorce. In one famous case, the court used a constructive trust on the marital property under the control of the executor of the estate to protect the left-behind wife. Subsequent cases used other equitable relief. It was clear that there was a lacuna in the legislation which had to be addressed.
Although Mr. Santana’s new will benefited his children, the Court gave Mrs. Santana survivor rights under the estate (about $615,000 more than she would have received in equitable distribution). The court found that her windfall was not an “unjust enrichment” harming the estate and the children. It also looked at “exceptional circumstances,” such as harm to the surviving spouse or situations in which the decedent’s estate could establish fraud or other misconduct on the other party’s part.
Are lawyers bound to advise every client of the possibility and potential outcomes of “black hole” litigation, should a litigant die pending a divorce? Do we suggest to a healthy spouse to unreasonably delay litigation until a sickly spouse dies? Since 2004, Pennsylvania law specifies that a divorce proceeding continues after death, with the economic rights and obligations between the parties determined under the family law statutes, instead of the probate statutes.
The New Jersey Assembly passed a bill in October 2022 to allow courts to proceed with equitable distribution when a death occurs during litigation. This bill is called Bill A2351 and would permit the court to “effectuate distribution of the property” if either parties dies before entry of a final judgment. The bill also specifically prevents the surviving spouse from receiving his or her share of a decedent spouse’s estate in such cases. And both civil unions or domestic partnerships will be covered by the bill, not only married couples.
The Bill, which is currently before the New Jersey Senate for a vote, does leave some items unaddressed, but it is a huge step forward toward closing the “black hole” that has existed for years in New Jersey when a divorcing spouse dies during proceedings. Given the majority of votes the bill received at the Assembly level, we expect the Senate will vote to approve the changes, which will bring matrimonial lawyers and their clients more certainty during Divorce litigation.