Preview:

Present:    Hassell, C.J., Lacy, Keenan, Koontz, Kinser, and
Agee, JJ., and Russell, S.J.
CHRISTIE COLTRANE SEXTON                                           OPINION BY
SENIOR JUSTICE CHARLES S. RUSSELL
v.    Record No.  050643                                           January  13,  2006
VIRGINIA CORNETT, ET AL.
FROM THE CIRCUIT COURT OF WYTHE COUNTY
J. Colin Campbell, Judge
This appeal involves the interplay between two statutory
schemes, the laws providing for a surviving spouse’s right to
claim an elective share in a deceased spouse’s augmented
estate, Code  §§  64.1-13 through  64.1-16.4,  (the augmented
estate laws) on one hand, and the laws exempting certain life
insurance proceeds and vested retirement benefits from legal
process, Code  §§  51.1-124.4,  51.1-510 and  38.2-3339  (the
exemption laws) on the other.
Facts and Proceedings
The parties submitted a stipulation of facts to the trial
court.    James Dean Sexton died intestate on August  31,  2003.
He had been employed by the police department of the Town of
Wytheville and by virtue of his employment was entitled to
group life insurance administered by the Virginia Retirement
System  (VRS).    He also had vested retirement benefits
administered by VRS.    At the time of his death, the value of
his VRS life insurance was  $68,392.88 and his VRS retirement




benefits amounted to  $27,394.60.    His estate contained no
other assets.
Sexton had no children.    He was survived by his wife,
Christie Coltrane Sexton  (the widow).    They had separated
before his death and divorce proceedings were pending between
them.    Sexton had designated his wife as the beneficiary of
his VRS life insurance and retirement benefits in  1994.    He
executed new VRS forms two months before his death, however,
designating his sister, Virginia S. Cornett and her infant
daughter, Lolly M. Cornett,  (the beneficiaries) sole
beneficiaries of his VRS life insurance and retirement
benefits.
After Sexton’s death, his widow filed a petition for a
determination of her elective share in his augmented estate,
naming the beneficiaries as defendants.    The petition claimed
that the life insurance proceeds and retirement benefits
should be included in the augmented estate of the decedent and
that the widow should be allowed one-half thereof as her
elective share.    The trial court appointed a guardian ad litem
to represent the interests of the infant defendant.
Upon the stipulated facts and exhibits, the trial court,
in a letter opinion, ruled that the value of the life
insurance proceeds and the value of the retirement benefits
should be added to the augmented estate pursuant to Code
2




§  64.1-16.1, but that nevertheless, that section  “does not
bring the actual benefits and life insurance proceeds into the
estate.”    Noting that the proceeds of group life insurance
policies are exempted by Code  §  38.2-3339 from application  “by
any legal or equitable process or operation of law” to any
debt or liability of any person who has a right under the
policy, the trial court held that the insurance proceeds and
retirement benefits were not a part of the augmented estate
and that the widow had no claim upon them.    Because Sexton's
estate had not been made a party to the suit, the trial court
held that it had no jurisdiction to enter any orders except to
rule upon the widow’s claim to the insurance and retirement
benefits.    We awarded the widow an appeal.
Analysis
The General Assembly, in  1990, revised the former laws
relating to wills and decedent’s estates to provide a new
system of augmented estates in lieu of the former system of
dower and curtesy rights, effective January  1,  1991.              1990
Acts, ch.  831.    The new system was designed to preclude one
spouse from disinheriting the other by transferring his
property to third parties during his lifetime and thus
depleting his estate, Chappell v. Perkins,  266 Va.  413,  421,
587 S.E.2d  584,  588  (2003), a feat easily accomplished at
common law, Gentry v. Bailey,  47 Va.  (6 Gratt.)  594  (1850).
3




Under the new system, the value of any property having an
aggregate value exceeding  $10,000 transferred to or for the
benefit of a donee by the decedent within the calendar year of
his death, or within any of the five preceding calendar years,
is to be included in the augmented estate.    Code  §  64.1-
16.1(A)(3)(d).    Further, persons such as the beneficiaries who
are "original transferees from or appointees of the decedent"
are "subject to contribution to make up the elective share of
the surviving spouse,"  §  64.1-16.2(c), although the surviving
spouse's right can be waived.    Dowling v. Rowan,  270 Va.  510,
517-18,  621 S.E.2d  397,  400-01  (2005).
When the decedent is not survived by children or their
descendants, the surviving spouse is entitled to one-half of
the augmented estate.    Code  §  64.1-16.    The designation of a
person as beneficiary under a life insurance policy is a gift
from the insured, even though the gift is revocable and its
enjoyment is postponed.    Walker v. Penick,  122 Va.  664,  672,
95 S.E.  428,  431  (1918).    The same reasoning applies to a
designation of a person as beneficiary of vested retirement
benefits.    Thus, if the augmented estate laws are read in
isolation, the assets held by these beneficiaries, as donees
of the decedent’s property within the year prior to his death,
are clearly subject to the widow’s claim.
4




On the other hand, the General Assembly has, for many
years, maintained a legislative policy of exempting VRS life
insurance proceeds and retirement benefits, in the hands of
their designated beneficiaries, from attack of any kind.    Code
§  51.1-510, pertaining to VRS life insurance, provides in
pertinent part:                                                    “[T]he insurance provided for in this
chapter, including any optional insurance, and all proceeds
therefrom shall be exempt from levy, garnishment, and other
legal process.”    Code  §  51.1-124.4, pertaining to VRS
retirement benefits, provides in pertinent part:                   “Retirement
allowances and other benefits accrued or accruing to any
person under this title  .  .  . shall not be subject to
execution, attachment, garnishment, or any other process
whatsoever  .  .  .                                                .”    Code  §  38.2-3339, pertaining to group
life insurance generally, provides:
§  38.2-3339. Exemption of group life insurance
policies from legal process.  - No group life
insurance policy, nor its proceeds, shall be liable
to attachment, garnishment, or other process, or to
be seized, taken, appropriated, or applied by any
legal or equitable process or operation of law, to
pay any debt or liability of any person insured
under the policy, or his beneficiary, or any other
person who has a right under the policy, either
before or after payment.    If the proceeds of a group
life insurance policy are not made payable to a
named beneficiary, the proceeds shall not constitute
a part of the insured person's estate for the
payment of his debts.
5




The foregoing provisions have been a part of the law of
Virginia since  1960,  1952, and  1934, respectively.
Undoubtedly, much legal advice has been given and many estate
plans have been made in reliance upon them.    The question
before us is whether they were partially repealed by
implication when the augmented estate laws were enacted in
1990.
The widow argues that the two statutory schemes are not
necessarily in conflict because the augmented estate laws do
not require that the beneficiaries pay into the estate for her
benefit the particular assets covered by the exemption
statutes.    After the augmented estate has been increased by
the  “value” of the exempt assets, the widow contends, the
beneficiaries may instead satisfy her claim by transferring to
her other assets of equal value, subject to the court’s
approval, citing Code  §  64.1-16.2(E).    We do not agree.    Such
a circular process would effectively nullify the exemption
laws and would require a court to accomplish by indirection
the very result those laws were designed to prevent.    We do
not attribute to the General Assembly the intention to create
such an anomaly.    The exemption statutes either apply or they
do not.    If they do not, it is because they were partially
repealed by implication through the enactment of the augmented
estate laws in  1990.
6




The implied repeal of an earlier statute by a later
enactment is not favored.    There is a presumption against a
legislative intent to repeal where the later statute does not
amend the former or refer expressly to it.    Albemarle County
v. Marshall,  215 Va.  756,  761,  214 S.E.2d  146,  150  (1975).
The courts assume that a legislative body, when enacting new
legislation, was aware of existing laws pertaining to the same
subject matter and intended to leave them undisturbed.
Otherwise, the older laws would have been amended or expressly
repealed.    Consequently, when two statutes are in apparent
conflict, it is the duty of the court, if reasonably possible,
to give them such a construction as will give force and effect
to each.    Scott v. Lichford,  164 Va.  419,  422-23,  180 S.E.
393,  394  (1935).
We adhere to a rule of construction that where there are
two statutes, the earlier special and the later general, and
the terms of the general are broad enough to include the
subject matter provided for in the special, a presumption
arises that the earlier special act is to be considered as
remaining in effect as an exception to the later general law.
Id. at  424,  180 S.E. at  395; see Crawford v. Haddock,  270 Va.
524,  528,  621 S.E.2d  127,  129  (2005).    The exemption laws are
statutes of special application, in the sense that they apply
only to specific and narrowly defined subject matter.    The
7




augmented estate laws, by contrast, are broad and sweeping in
their application to nearly all conceivable species of
property rights.
Conclusion
Applying the foregoing rules of statutory construction,
we hold that the exemption laws remain in effect as exceptions
to the application of the augmented estate laws.    It follows
that the rights of the beneficiaries to the proceeds of the
decedent’s VRS life insurance and retirement benefits are
unaffected by the augmented estate laws, that those exempt
assets did not become a part of the augmented estate, that
their value should not be added to it, and that the
beneficiaries are not subject to any claims for contribution.
Although we do not agree with the reasoning expressed by the
trial court in reaching its decision, its holding was correct
and we will affirm the judgment.
Affirmed.
8

Download 1050643.pdf

Virginia Law