It’s not uncommon for divorcing couples to negotiate for one spouse to receive a distribution on the death of the other spouse. That arrangement might be by maintaining a life insurance policy, or just an agreement that the spouse’s estate pay a fixed sum on death. Sometimes, though, the planned payment doesn’t work out.
Let’s start with the divorce settlement
In 1987, Charles Evitt and Judith Evitt-Thorne were divorced in Arizona. Their divorce settlement included this provision:
If wife shall survive Husband, Husband agrees to provide wife … the sum of $150,000.00 upon Husband’s death. This provision shall be deemed satisfied if Husband provides insurance proceeds from any existing policy of life insurance or any new policy which Husband may from time to time obtain, including policies in which the Wife is now or in the future may be named as the owner and/or beneficiary.
In other words, Charles Evitt promised to leave $150,000 worth of life insurance to his ex-wife, or to pay that sum from his estate. In theory, that obligation would follow him for the rest of his life.
After the divorce was finalized, Mr. Evitt remarried and moved to Wyoming. He died there in 2013 — more than a quarter-century after his divorce decree was entered. At 87, he no longer had any life insurance policy naming his ex-wife as beneficiary.
The probate in Wyoming
After Mr. Evitt’s death, his widow and his two daughters initiated a probate proceeding in Wyoming. It took about almost a year to complete the probate, but in August, 2014, the Wyoming probate court approved the final settlement of the probate and discharged the personal representatives.
As usual, the probate proceeding had included publication of a “notice to creditors.” That process is intended to notify anyone who might have a claim against the decedent that it is time to make their claim — or lose it.
According to Mr. Evitt’s daughters, they didn’t give specific notice to his ex-wife because they did not know about her claim arising from the divorce settlement. A review of his business records and discussions with his accountant had not revealed the existence of the claim, either.
A year after the end of the Wyoming probate proceeding had concluded, Ms. Evitt-Thorne wrote to Mr. Evitt’s daughters about the divorce settlement provision. She claimed that she was entitled to the $150,000 payment from his estate, and that she would initiate probate proceedings in Arizona if she was not paid.
The probate in Arizona
When Mr. Evitt’s daughters did not pay her the $150,000, Ms. Evitt-Thorne did start an Arizona probate proceeding. She also filed a petition for allowance of her claim in that probate case.
Mr. Evitt’s daughters objected to the Arizona probate case, and asked for summary judgment disallowing the claim. They insisted that Ms. Evitt-Thorne’s claim was barred because she had not filed it within the three-month period allowed under Wyoming law. The Arizona probate judge agreed, and dismissed the probate claim; he also entered judgment against Ms. Evitt-Thorne for $46,926.27 in attorney’s fees.
Ms. Evitt-Thorne appealed the Arizona probate dismissal. She argued that the notice to creditors was ineffective to cut off her claim because it arose at (or after) Mr. Evitt’s death. She also argued that there was a legitimate issue about whether Mr. Evitt’s daughters could reasonably have ascertained her divorce settlement claim existed.
The Arizona appellate decision
Arizona’s Court of Appeals agreed with Mr. Evitt’s daughters (and the Arizona probate court). Ms. Evitt-Thorne’s claim was filed too late — a year too late, in fact — to be allowed and paid. The delay was not the estate’s fault, ruled the appellate court. Ms. Evitt-Thorne needed to be more diligent about making sure that her ex-husband maintained a life insurance policy, or about making her claim against his Wyoming estate. The attorney’s fee award against her was also upheld. In re Estate of Evitt, August 23, 2018.
The Arizona Court of Appeals decision did not address other questions that naturally arise. What business did an Arizona probate court have even considering the probate of Mr. Evitt’s estate? He had lived for years in Wyoming, had all of his property in Wyoming and died there. He owned no property in Arizona, had not lived here for decades, and had no pending court proceedings. Having a creditor in Arizona should not have been sufficient — especially in circumstances where a probate proceeding had been timely and properly initiated and concluded in his home state.
What larger questions can be resolved by Mr. Evitt’s Arizona appellate case? The key message: people who are owed money — even if they have an enforceable court judgment — need to be diligent. A creditor needs to be aware of the location and status of their debtor if they expect to be paid from the debtor’s estate. While the personal representative of a probate estate has an affirmative duty to look for creditors, that does not necessarily guarantee that every creditor will be found.