Agans v. Barnd

998 P.2d 449, 196 Ariz. 367, 306 Ariz. Adv. Rep. 18, 1999 Ariz. App. LEXIS 181
CourtCourt of Appeals of Arizona
DecidedOctober 12, 1999
DocketNo. 1 CA-CV 99-0047
StatusPublished
Cited by10 cases

This text of 998 P.2d 449 (Agans v. Barnd) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Agans v. Barnd, 998 P.2d 449, 196 Ariz. 367, 306 Ariz. Adv. Rep. 18, 1999 Ariz. App. LEXIS 181 (Ark. Ct. App. 1999).

Opinion

[368]*368OPINION

TOCI, Judge.

¶ 1 This appeal involves a dispute between a decedent’s surviving spouse and his mother over the proceeds of a term life insurance policy. Because insufficient assets existed from which to pay statutory allowances to the surviving spouse, the trial court granted a petition to include the insurance proceeds in the probate estate. The issue presented by this appeal is whether Arizona’s adoption of the Uniform Probate Code (“U.P.C.”) abrogates prior case law that community insurance proceeds payable to a third party are subject to the payment of statutory allowances in decedent’s probate estate. We hold that by expressly identifying certain surviv-orship and pay-on-death accounts as the only nontestamentary transfers that are ineffective against statutory allowances payable under Arizona Revised Statutes Annotated (“A.R.S.”) sections 14-2402 through 14-2404 (1995), the legislature excepted life insurance proceeds from the reach of such allowances. Therefore, we reverse.

I. FACTS AND PROCEDURAL HISTORY

¶ 2 The decedent, Edward Agans, was survived by his wife, Christina Agans. Christina filed an application for informal probate of his will and was appointed personal representative of his estate. After discovering that decedent had named his mother, Nancy Barnd, as the beneficiary of a term life insurance policy, Christina filed a petition to have the insurance proceeds included in the probate estate. If the insurance proceeds were not added to the probate estate, it would lack sufficient funds to provide Christina the statutory allowances of a surviving spouse under A.R.S. sections 14-2402 through 14-2404. The court granted the petition over Barnd’s objection. She appeals from that portion of the order placing the $20,000 life insurance proceeds in the estate.

II. DISCUSSION

¶ 3 The only issues that the parties raise on appeal are legal questions of statutory construction, which we review de novo. See Prudential v. Estate of Rojo-Pacheco, 192 Ariz. 139, 143, 962 P.2d 213, 217 (App. 1997).

A. Designation of a Non-Spouse as Beneficiary

¶ 4 When an insured names someone other than his or her spouse as beneficiary of a life insurance policy, disposition of the proceeds necessarily involves consideration of community property rights. When community funds are the source of premiums, as the parties have agreed here, the surviving spouse has an interest in the proceeds. See In re Estate of Alarcon, 149 Ariz. 336, 338, 718 P.2d 989, 991 (1986). If someone other than the spouse is named as beneficiary without the spouse’s consent, there is a constructive fraud to the extent that the surviving spouse does not receive half of all the community and otherwise jointly acquired property including the insurance proceeds. See Gaethje v. Gaethje, 7 Ariz.App. 544, 549-50, 441 P.2d 579, 584-85 (1968).

¶ 5 In Gaethje, this court noted that occasions exist when a surviving spouse is entitled to the deceased’s half of community property for statutory allowances despite a contrary testamentary disposition. Because the issue had not been presented, the court did not address whether nontestamentary transfers at death can be reached to pay those allowances. 7 Ariz.App. at 549 n. 2, 441 P.2d at 584 n. 2.

B. Applicability of Guerrero v. Guerrero

f 6 Gaethje was reconsidered in Guerrero v. Guerrero, 18 Ariz.App. 400, 502 P.2d 1077 (1972), in which a widow sued to recover insurance proceeds from a term policy on her husband’s life made payable to his niece. Following judgment in favor of the widow, the niece appealed, contending that the insurance policy was the decedent’s sole and separate property. Alternatively, she argued that under the principles set forth in Gaethje, she was entitled to the decedent’s community share of the insurance proceeds. Id. at 400-01, 502 P.2d at 1077-78.

¶ 7 The court first found that the policy premiums had been paid with community [369]*369funds. Id. at 402, 502 P.2d at 1079. It next discussed former A.R.S. section 14-517, which had provided that an estate of $3500 or less (exclusive of liens and the spouse’s half of the community property) would vest in the surviving spouse through summary proceedings. The court emphasized that the statute was intended to give the surviving spouse or minor children an “absolute vested right in the estate property despite its character and despite the disposition made by the deceased spouse,” a purpose which would be subverted if the spouse could change the beneficiary of an insurance policy without the other spouse’s consent. Id. at 403, 502 P.2d at 1080. The court concluded that the widow was entitled to the entire proceeds of the policy. Id.

¶ 8 The parties disagree as to the applicability of Guerrero here. Christina argues that Guerrero stands for the proposition that making a non-spouse the life insurance beneficiary is a constructive fraud' on the surviving spouse when the value of the estate does not exceed the statutory allowances. We find, however, that to the extent that Guerrero regarded insurance proceeds payable to a third party as part of a probate estate, it has been abrogated by the adoption of the U.P.C. See A.R.S. § 14-6101.

C. Legislative Abrogation of Guerrero

¶ 9 The trial court’s inclusion of the insurance proceeds in decedent’s probate estate was intended to further the public policy identified in Guerrero of protecting a surviving spouse and minor children. The trial court concluded that this policy is paramount, survives the enactment of the U.P.C., and outweighs the distinction between probate and nonprobate assets. We disagree. The U.P.C., as adopted by Arizona, provides that a personal representative’s power to set aside nontestamentary dispositions is limited to certain financial accounts with survivor-ship or pay-on-death designations. See A.R.S. § 14-6215CA).

¶ 10 Our primary goal in construing statutes is to discern legislative intent. In re Guardianship!Conservatorship of Denton, 190 Ariz. 152, 155, 945 P.2d 1283, 1286 (1997). The legislative purpose in adopting the bulk of the U.P.C. was “ ‘to provide for a substantial revision’ of the state’s probate laws.” Gonzalez v. Superior Ct., 117 Ariz. 64, 66, 570 P.2d 1077, 1079 (1977) (quoting 1973 Ariz. Sess. Laws, Ch. 75 § 4). “When a statute is based on a uniform act, we assume that the legislature ‘intended to adopt the construction placed on the act by its drafters.’ ” In re Estate of Dobert, 192 Ariz.

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Bluebook (online)
998 P.2d 449, 196 Ariz. 367, 306 Ariz. Adv. Rep. 18, 1999 Ariz. App. LEXIS 181, Counsel Stack Legal Research, https://law.counselstack.com/opinion/agans-v-barnd-arizctapp-1999.