Law Lessons from Kay v. Estate of Kay, 405 N.J. Super. 278 (App. Div., 2009), affirmed, ___ N.J. ___ (2010) (A-1594-07T3; January 28, 2009):

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This State’s matrimonial law “embod[ies] a clear and strong public policy with respect to cognizable rights of spouses in marital property.” Carr v. Carr, 120 N.J. 336, 348 (1990). “These rights arise from the marital relationship in which, presumptively, both parties contribute in varied ways to the creation, acquisition and preservation of their familial property and, thereby secure a protectable interest to share, possess, and enjoy that property.” Id. at 348-49.

When spouses divorce, marital property is distributed equitably between them in accordance with N.J.S.A. 2A:34-23h and N.J.S.A. 2A:34-23.1. But, when one spouse dies during the pendency of an action for divorce, the action is abated and statutory equitable distribution is unavailable. Carr, supra, 120 N.J. at 342.

Although marital property is not subject to statutory equitable distribution when one spouse dies while an action for divorce is pending, the statutes do “not reflect a legislative intent to extinguish . . . property entitlements,” and “marital property does not lose its essential and distinctive nature as property arising from the joint contributions of both spouses during the marriage because of the death of one spouse during the pendency of divorce proceedings.” Id. at 349-50. On those grounds, the Supreme Court has held that, “upon a sufficient evidentiary showing,” courts should invoke the equitable remedy of constructive trust and principles of quasi-contract “to avoid the unjust enrichment that would occur if the marital property devolving to [a decedent-spouse's estate] included the share beneficially belonging to” the surviving spouse. Id. at 353-54.

The equities implicated when the decedent’s estate, not the surviving spouse, seeks to prevent unjust enrichment are undoubtedly different. But, the distinctions are not sufficient to warrant an absolute prohibition against an estate’s assertion of equitable claims against the marital estate regardless of other relevant facts. Compare Krudzlo, supra, 251 N.J. Super. at 73 (concluding that an estate may not obtain a constructive trust on the marital assets to prevent unjust enrichment of a surviving spouse) with Groh v. Groh, 288 N.J. Super. 321, 325-27 (Ch. Div. 1995) (considering the merits of an equitable claim raised by the estate of a spouse who died while the action for divorce was pending); cf. Castonguay v. Castonguay, 166 N.J. Super. 546, 549 (App. Div. 1979) (dismissing claims presented by intervenors — creditors and legal heirs of a decedent spouse who died intestate — who sought to pursue the decedent’s right to statutory equitable distribution to collect on debts owed by a spouse who died before entry of a judgment of divorce).

A broad rule barring such equitable claims regardless of the facts is in tension with general principles governing the exercise of a court’s inherent equitable jurisdiction. See Carr, supra, 120 N.J. at 351. The equities that warrant an equitable remedy arise from “facts which call for relief from the strict legal effects of given situations.” Ibid.

When the estate of a spouse who died while an action for divorce is pending presents a claim for equitable relief related to marital property, the court may not refuse to consider the equities arising from the facts of that case solely on the ground that the estate may not assert equitable claims against the marital estate sounding in constructive trust, resulting trust, quasicontract or unjust enrichment.

[See related Blog Post, published in the New Jersey Family Law blog.]

[Also see related Blog Post, published in the New Jersey Law Blog]

NOTE: This Blog/Blawg, NJ Family Issues, is managed by Paul G. Kostro, Esq., an attorney/lawyer/mediator.