June 19, 2012
ARLENE DEN HOLLANDER, PLAINTIFF-RESPONDENT,
JACOB DEN HOLLANDER, DEN HOLLANDER GREENHOUSES, L.L.C., DAVID DEN HOLLANDER AND ROY DEN HOLLANDER, AS EXECUTORS OF THE ESTATE OF JON DEN HOLLANDER, DEFENDANTS-APPELLANTS, AND THE ESTATE OF JON DEN HOLLANDER, DEFENDANT/INTERVENOR-APPELLANT.
On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-3174-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted May 7, 2012 -
Before Judges Grall and Skillman.
The Estate of Jon den Hollander, through its executors, appeals from an order entered on partial summary judgment in an action for declaratory and injunctive relief and damages filed by the decedent's wife, plaintiff Arlene den Hollander. Since the grant of partial summary judgment in favor of Arlene, all other issues between the parties have been resolved.
The question presented on appeal is narrow - whether the court erred in invalidating Jon's last will and testament on the ground that it was executed in violation of a consent order prohibiting Jon and Arlene from dissipating marital assets. We conclude that the last will and testament cannot be invalidated on that basis and consequently remand for further proceedings. Our reversal does not affect the court's determination on ownership of the real estate held by Jon and Arlene as tenants in the entirety prior to Jon's death, which now belongs to Arlene, or the money judgments the court awarded for the defendants' use and occupancy of that real estate.
Jon died in May 2009. Prior to his death, Jon was the only member of a business, Hollander Greenhouses, L.L.C., which he operated on property he and Arlene owned as tenants in the entirety. The equipment used in that business was also housed on that property.
Jon and Arlene had been separated for about two years when he died. After separating, they reached a temporary agreement that was memorialized in a consent order resolving a domestic violence action commenced by Arlene in Spring 2007. The consent order gave Jon temporary possession of the marital residence and addressed custody and support for their children and Arlene. Most pertinent here, the consent order provides: "Neither party shall dissipate any marital assets." They further specified that the parties' agreement "was made without prejudice to any claims he or she may have in any future family matters between the parties for equitable distribution or other relief."
The consent order was still in effect when Jon executed his last will and testament on November 14, 2008. In that document, Jon acknowledges his marriage, separation and three children and states his intent to "make no provision . . . for [his] children" and to "disinherit [his] current wife Arlene to the greatest extent possible under the law." In that document, Jon directed payment of specified expenses and estate taxes from his estate. He further directed, "the rest, residue and remainder of [his] property and estate, both real and personal, . . . that [he] own[s] or to which [he] shall be in any manner entitled at the time of [his] death" be held in trust for his mother and sister. He designated two of his brothers, defendants David and Roy den Hollander, as co-trustees under his will.
Following Jon's death, Arlene commenced litigation seeking to have Jon's brother Jacob ejected; he had been living with Jon in the marital residence since the couple's separation and remained there. She also sought damages for his use and occupancy of the premises after Jon's death.
Most pertinent to the issue raised on this appeal, Arlene sought a declaration invalidating provisions of Jon's will and testament bequeathing "any marital assets" to a trust for the benefit of his mother and sister on the ground that they violated the consent order's prohibition against dissipation of marital assets. She also sought a declaration that she was the sole owner of the business, its equipment and "loophouses." She relied on the provision of the consent order precluding dissipation of marital assets, and the trial court accepted that argument.
Our disagreement with the trial court is with its legal interpretation of the relevance of a prohibition against the dissipation of marital assets to the validity of Jon's last will and testament. Review of that legal determination is de novo. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). A consent order, like any agreement, must be interpreted in accordance with the reasonable meaning of its terms in their context to discern the intent of the parties. See Pacifico v. Pacifico, 190 N.J. 258, 266 (2007) (taking this approach in the interpretation of a property settlement agreement).
An agreement to refrain from dissipation of marital assets without reference to testamentary dispositions by will cannot be understood as an agreement to die intestate or to include specific bequests in a will. In the first place, it lacks the requisite specificity. See N.J.S.A. 3B:1-4 (providing that such a contract "can be established only by (1) provisions of a will stating material provisions of the contract; (2) an express reference in a will to a contract and extrinsic evidence proving the terms of the contract; or (3) a writing signed by the decedent evidencing the contract").
Furthermore, nothing in the nature of orders precluding dissipation of marital assets suggests that they cover testamentary dispositions. In the context of marital assets, dissipation is generally understood to encompass one spouse's diversion of assets acquired during the marriage in contemplation of divorce and with the goal of depriving the other spouse of his or her equitable share. Kay v. Kay, 405 N.J. Super. 278, 286 (App. Div. 2009), aff'd, 200 N.J. 551 (2010). Thus, orders prohibiting dissipation are entered to preserve those assets for equitable distribution pending a contemplated divorce.
The respective circumstances under which equitable distribution is available and testamentary dispositions take effect do not suggest that a spouse who makes a will does so to avoid equitable distribution. Equitable distribution is a statutory remedy that is not available on the death of a spouse. Carr v. Carr, 120 N.J. 336, 342 (1990). It is available only when a "judgment of divorce, . . . [or] divorce from bed and board is entered . . . ." N.J.S.A. 2A:34-23(h) (also providing for equitable distribution on dissolution of a civil union). A last will and testament is effective only "[u]pon the death of an individual." N.J.S.A. 3B:1-3. Therefore, execution of a last will and testament, without more, cannot suggest an intent to deprive one's spouse of equitable distribution because that remedy is not available to the spouse of a decedent.
We acknowledge that this consent order, by indicating that it was entered without prejudice to "any future" actions for equitable distribution, arguably suggests that one or both of the parties contemplated divorce when they agreed to a restraint against dissipation. But more than a year had passed between the entry of the consent order and Jon's execution of the will, and neither party had filed any such action. In the absence of any action on Jon's part to divert assets or to lull or coerce Arlene to forego or postpone litigation to obtain equitable distribution, Jon's execution of a last will and testament cannot be viewed as an effort to dissipate marital assets.
Finally, the Supreme Court has held that a spouse who is disinherited may qualify for an equitable remedy to avoid unjust enrichment of the beneficiaries if his or her spouse dies while an action for divorce is pending. See Carr, supra, 120 N.J. at 353-54. That remedy, unlike invalidation of a will, does not leave the surviving spouse with the entirety of the marital estate. Rather, where warranted, it is applied only to the extent appropriate to "avoid the unjust enrichment that would occur if the marital property devolving to [the decedent's] estate included the share beneficially belonging to [the surviving spouse]." Ibid. Contrary to the rationale of Carr, the trial court's conclusion that the consent order invalidated Jon's last will and testament had the potential to unjustly enrich Arlene by leaving her with his as well as her share of the marital assets, including the real property that they held as tenants in the entirety prior to Jon's death.
It is worth noting that the Legislature has provided a remedy for a disinherited spouse that Arlene did not attempt to invoke - an elective share that is available to a spouse who "had not been living separate and apart in different habitations or had not ceased to cohabit as man and wife, either as the result of judgment of divorce from bed and board or under circumstances which would have given rise to a cause of action for divorce or nullity of marriage to a decedent prior to his death under the laws of this State." N.J.S.A. 3B:8-1. As Arlene did not invoke the statute, it is not clear whether there is any basis for the court to fashion an equitable remedy as a substitute for the elective share the Legislature has provided. See Carr, supra, 120 N.J. at 350-51 (noting "that plaintiff's peculiar status, for which statutory relief is unavailable, should be remedied through judicial exercise of its inherent equitable jurisdiction and invocation of 'general equitable remedies'").
For all of the foregoing reasons, the order invalidating Jon's last will and testament on the ground that it was executed in violation of the consent order must be vacated. Accordingly, we reverse the grants of partial summary judgment from which defendants appeal and remand for further proceedings in conformity with this decision.
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