It started almost like a Mickey Spillane mystery. One day a lawyer I knew casually called me. He wanted me to meet a client of his who had a problem. So I arranged to meet them at his office the next day. I got there first. Before he could brief me, his client walked in. Young, tall, slender, exotically beautiful. And crying. They laid out the problem: millions of dollars had disappeared from her (recently deceased) husband’s estate and may have been sent overseas. She had been functionally disinherited. Could I help?
The facts also seemed right out of a mystery novel:
- The estate might have been worth as much as $3 million to $5 million but when probated was estimated to be less than $100,000.00.
- My client was the younger second wife of an older, very successful, scientist/inventor who had immigrated to the United States with part of his family.
- Shortly after their marriage, she discovered that he was mortally ill. After several years, when his time grew near, she asked him to provide for her future.
- He refused, claiming that she was trying to kill him before his time. His behavior changed: instead of sharing information, he altered his life insurance; secretly sold his stocks; borrowed against his retirement fund, the house, and his other assets; did not pay taxes on his gains, and gave all the cash he could raise to his sister (ostensibly for their parents who lived abroad).1
- Finally, he went to a lawyer and made a will specifically disinheriting my client, giving all his assets to his sister, the executrix.
Under Maryland law, my client, as the spouse, had the right to either take what she was given in the will (in this case nothing) or elect to take her statutory share, 50 percent of the estate. But what was the estate? Because the Husband gave all his assets away before he died, the estate was minuscule. Unless I could reverse the gifts and recover them. Could this be done?
Under Maryland law, the legal basis for undoing estate planning is “fraud on the marriage.” This is an ambiguous concept, one that led to many different cases and interpretations. But I found an interesting case: Karsenty v. Schoukroun, 406 Md. 469, 959 A.2d 1147 (2008). Karsenty did not apply directly as it dealt only with what are called transfers upon death and when those transfers can be invalidated. But when I read the case, I realized that Karsenty could be used for my own purposes to invalidate the actions of the deceased husband.
You see, Karsenty rationalized and/or overturned all the previous Maryland cases explaining fraud on the marriage. In Karsenty the court ruled that it would no longer look for “fraud” or “intent to defraud” but would, instead, look to other factors showing the intent of the deceased. The key was whether the decedent parted with ownership in form but not in substance. In my case, I had deposition testimony from the sister/executrix that her older brother could do no wrong and, of course, she had to do whatever he told her to do. Furthermore, I was able to argue that what the husband did was not reasonable estate planning and that, given the specific vindictive statement contained in the will and expressed by the executrix/sister, it was clear that the whole purpose of what was done was to punish my client. When I was done, we got a very nice settlement and recovered much of what should have been part of the estate.
So what’s the takeaway lesson? Analogize and distinguish still works: you just need to be creative and look for cases that let you do it.
1. How I prevented the money from being sent abroad is another article.