In re Estate of Beckhart

SUPREME COURT CASES

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State: Illinois

Court: 3rd District Appellate

Docket No: 3-06-0269 Rel

Case Date: 03/23/2007

Preview:No. 3--06--0269 Filed March 23, 2007. _________________________________________________________________ IN THE APPELLATE COURT OF ILLINOIS THIRD DISTRICT A.D., 2007 In the Matter of the Estate of RONNIE BECKHART, ) Appeal from the Circuit Court ) of the 14th Judicial Circuit, ) Rock Island County, Illinois, Deceased ) ) (JAYNE LAISNER, mother and next ) friend of RYAN BECKHART, a ) minor, ) ) Petitioner-Appellant, ) No. 04--P--126 ) v. ) ) PATRICIA BECKHART, ) Administrator of Estate of ) Ronnie Beckhart, deceased, ) Honorable ) Mark A. VandeWeile, Respondent-Appellee). ) Judge, Presiding. _________________________________________________________________ JUSTICE CARTER delivered the opinion of the court: _________________________________________________________________ The petitioner, Jayne Laisner, mother and next friend of minor Ryan Beckhart, filed first a probate claim for insurance proceeds in the deceased's estate, then a motion for constructive trust, alleging that the respondent, Patricia Beckhart, improperly used the proceeds from a life insurance policy. The

circuit court found that laches barred the petitioner's claim. On appeal, the petitioner argues that the circuit court erred

when it denied her motion for constructive trust. remand. FACTS

We reverse and

The parties entered a joint statement of facts, which revealed the following relevant facts: On December 7, 2001, the circuit court entered an order in a separate case that adopted a settlement agreement between the petitioner and the decedent, Ronnie Beckhart. In relevant part,

the agreement required that "[b]oth parties shall name [their son, Ryan Beckhart] as a direct or indirect beneficiary on any life insurance policies provided to them at no cost from the employer." The decedent's employer provided him a life insurance

policy at no cost, on which the decedent named his estate as beneficiary. policy. The decedent died intestate on March 7, 2004. The circuit The decedent never changed the beneficiary on this

court issued a letter of administration on March 18, 2004, which named the respondent the administrator of the decedent's estate. On March 24, 2004, the respondent published a legal notice of the decedent's death, and stated that any estate claims must be made on or before October 30, 2004. until April 7, 2004. On April 1, 2004, the petitioner's attorney filed an estate claim on Ryan's behalf. In relevant part, the claim requested The advertisement ran

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"the proceeds of any life insurance policies provided to decedent by his employer in effect as of the date of the entry of the court's order of December 7, 2001, in Case No. 01 F 210, for which the decedent was ordered to name the minor child as a direct or indirect beneficiary." circuit court on April 7, 2004. On April 23, 2004, the insurance company paid the proceeds of the decedent's life insurance policy to his estate. On May 5, 2004, the respondent filed an inventory of the decedent's estate, which included real estate valued at $14,877.74, the life insurance policy valued at $25,000, a savings account containing $1,584.71, a checking account containing $1,059.72, and a share account containing $5. On March 10, 2005, the petitioner's attorney filed a motion to withdraw, which she made at the petitioner's request. court granted the motion to withdraw on March 24, 2005. On March 30, 2005, the petitioner's new attorney filed his entry of appearance and filed a motion to establish a constructive trust. In the motion, the petitioner's attorney The The claim was filed with the

alleged that the respondent had been improperly using the proceeds from the life insurance policy for estate expenses. The respondent filed her answer on October 13, 2005. In

relevant part, she asserted the affirmative defense of laches, alleging that the motion for constructive trust was not filed

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until one year after the insurance policy proceeds were distributed, and that the delay prejudiced the estate because the proceeds were used for estate expenses. The circuit court issued its decision on March 10, 2006. The court found that the 12-month delay in filing for a constructive trust was solely attributable to the petitioner, which served to bar the petitioner's claim via the doctrine of laches. Accordingly, the circuit court denied the petitioner's The petitioner appealed.

motion for a constructive trust.

ANALYSIS On appeal, the petitioner argues that the circuit court erred when it denied her motion for a constructive trust. Specifically, she argues that the estate claim was timely filed, the delay in bringing the motion for constructive trust was not prejudicial, and that a constructive trust is the appropriate remedy for Ryan to receive the policy's proceeds. However,

resolution of this issue requires us to initially determine who was entitled to the policy's proceeds. The Probate Act of 1975 (755 ILCS 5/1--1 et seq. (West 2004)) does not govern the rights of a beneficiary to the proceeds of a life insurance policy. Bergheger v. Boyle, 258 Section 1 of the Third

Ill. App. 3d 413, 629 N.E.2d 1168 (1994).

Party Beneficiary Contract Act (755 ILCS 30/1 (West 2004)) provides that "[t]he designation in accordance with the terms of

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any insurance *** contract *** shall not be subject to or defeated or impaired by any statute or rule of law governing the transfer of property by *** intestacy." In this case, the settlement agreement of December 7, 2001, required that the decedent name Ryan as the beneficiary of the life insurance policy the decedent had through his employer. decedent failed to do so before he died. The

The petitioner did not

file a claim with the insurance company; rather, the insurance company paid the proceeds to the decedent's estate, who was the listed beneficiary. The respondent used the proceeds to pay the

estate's expenses, despite the fact that the petitioner filed an estate claim asserting that Ryan had a superior right to the proceeds. It is not unusual in a settlement agreement to impose

an obligation to maintain life insurance to secure a child's support. See In re Estate of Downey, 293 Ill. App. 3d 234, 687 It is also not unusual for parents to agree

N.E.2d 339 (1997).

to secure this type of benefit for a child in discharge of their moral obligations, and as a token of parental affection. Ryan

obtained a vested, contingent right to those benefits when the settlement agreement was entered and the judgment became final. See Smithberg v. Illinois Municipal Retirement Fund, 192 Ill. 2d 291, 735 N.E.2d 560 (2000). A settlement agreement that requires an insured to name his child as the beneficiary of a life insurance policy vests the

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child with an equitable right that can be enforced. Comiskey, 125 Ill. App. 3d 30, 465 N.E.2d 653 (1984).

Estate of If the

insured fails to name his child as the beneficiary, equity mandates that courts treat the policy as if the child had been named as the beneficiary. N.E.2d 653. Comiskey, 125 Ill. App. 3d 30, 465

Because equity will regard as done what ought to be

done, we find that Ryan was entitled to the proceeds as the proper beneficiary of the policy, not the estate, and that the respondent was without authority to use the proceeds for estate expenses. See Smithberg, 192 Ill. 2d 291, 735 N.E.2d 560;

Lincoln National Life Insurance Co. v. Watson, 71 Ill. App. 3d 900, 390 N.E.2d 506 (1979). A constructive trust may be imposed when one party receives property belonging to another under circumstances in which the receiver would be unjustly enriched if allowed to retain the property. In re Estate of Wallen, 262 Ill. App. 3d 61, 633 When

N.E.2d 1350 (1994); Restatement of Restitution

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