Blood Money

July 30, 2014 § 6 Comments

Many years ago I represented two young children whose mother had died while on an ill-fated catfishing trip to the flooded Lost Horse Creek in northeast Lauderdale County. She had been invited on the outing by her husband, who only the week before had taken out $400,000 in life insurance policies on her life, with himself as sole beneficiary. The policies had double-indemnity provisions for accidental death.

The husband claimed that the wife had slipped in the rain-soaked mud, fell into the creek and must have hit her head on a tree limb, knocking her unconscious and either killing her by the blow, or she drowned.

The coroner disagreed, finding that she had suffered more than one heavy, crushing blow to the back of the skull with a blunt object — an injury that was inconsistent with the circumstances the husband claimed — and there was no water in her lungs, indicating that she was dead before she fell in the creek.

The husband was indicted for murder, and the proof at trial included that he had offered a local bar owner $5,000 to kill her some ten months before he himself did the deed. The husband was convicted of murder. His appeal was unsuccessful. Hammond v. State, 465 So.2d 1031 (Miss. 1985).

I filed a petition in chancery court to have the husband disqualified from recovering the insurance proceeds, which had been interpled by the insurance companies. He contested the matter, but the chancellor ruled that the proceeds were property of the woman’s estate, the only heirs of whom were the two sons. There was no appeal.

The law of Mississippi is that a life insurance beneficiary who wilfully takes the insured’s life may not recover the insurance benefits. Gholson v. Smith, 210 Miss. 28, 29, 48 So.2d 603, 604 (Miss. 1950). In the case of Dill v. Southern Farm Bureau Life Ins. Co., 797 So.2d 858, 866 (Miss. 2001), the court ruled that the standard of proof is by a preponderance.

The same rule applies in inheritance.

In the recent case of Young v. O’Beirne, adm’r of the Estate of Young, decided by the COA on June 3, 2014, the COA found that Mr. Young, who indisputably had murdered Mrs. Young, could not have any interest in her estate, based on MCA 91-1-25, which provides that “[i]f any person wilfully cause[s] or procure[s] the death of another in any way, he shall not inherit the property, real or personal, of such other; but the same shall descend as if the person so causing or procuring the death had predeceased the person whose death he perpetrated.”

A similar code section is found at MCA 91-5-33, which provides that a person who has wilfully caused or procured the death of another person shall not take any real or personal property of the decedent under any will, testament or codicil, and as to any such devise the testator is deemed to have died intestate.

Note that a plea of guilty to manslaughter, standing alone, is not sufficient to support a finding that would preclude inheritance under either statute. Hood v. VanDevender, 661 So.2d 198 (Miss. 1995). That would not preclude the chancery court, however, from finding that the act rose to the level of wilfullness that would invoke either statute, because the killing need not amount to murder, but the proof only needs to establish that it was wilful and without justification in law. Henry v. Toney, 211 Miss. 93, 50 So.2d 921 (1951).

The courtly Mr. Tom Ethridge, who taught equity and chancery practice at Ole Miss Law School years ago when such things were still worthy subjects of legal academia, used to say, “Equity means do right.” Do right. That is behind these laws. I recently told a young lawyer that if you’re uncertain about what the law might be in a given situation, figure out what the most honest, forthright thing to do might be, and you’ll probably be pretty close to what the law requires. Just do right.

ONE WAY TO PUT $50,000 IN THE POCKET OF YOUR CLIENTS

December 3, 2010 § 5 Comments

You are representing the executrix who is one of three siblings who are the legatees of the decedent.  They have come to you because their dad’s only asset of any real value, other than his furniture and an old car, was a life insurance policy with a face value of $50,000 that he had made payable to his executor for the estate, and the estate needs to be probated to receive the insurance proceeds.

The catch is that the creditors have claims that exceed the proceeds of the life insurance policy:  $17,000 to various credit cards; $8,000 to a loan company; and $36,000 to doctors and hospitals for the final illness.  Pretty bleak. 

The furniture and car are exempt property, as we know.  Is there anything else you can do?

Look at MCA § 85-3-13.  Here’s what it says:

The proceeds of a life insurance policy not exceeding Fifty Thousand Dollars ($50,000.00) payable to the executor, or administrator, of the insured, shall inure to the heirs or legatees, freed from all liability for the debts of the decedent, except premiums paid on the policy by any one other than the insured, for debts due for expenses of last illness and for burial; but if the life of the deceased be otherwise insured for the benefit of his heirs or legatees at the time of his death, and they shall collect the same, the sum collected shall be deducted from the Fifty Thousand Dollars ($50,000.00) and the excess of the latter only shall be exempt. No fee shall be paid or allowed by the court to the executor or administrator for handling same.

Under this section, the first $50,000 in life insurance proceeds is exempt from the claims of creditors, although that amount would be reduced by the amount of any other life insurance proceeds that the legatees receive from policies on the decedent’s life.  The only exceptions to the exemption would be:  Any claim made for payment of life insurance premiums made on the policy by someone other than the insured; and any claims for the burial and administrator’s or executor’s attorney’s fees for administering the estate, since those are not debts of the decedent, but rather are debts of his estate.  Dobbs v. Chandler, 36 So. 388 (Miss. 1904).  But attorney’s fees incurred in recovering insurance proceeds are not an administrative expense chargeable against the proceeds.  Abernethy v. Savage, 132 So. 553, 554 (Miss. 1931).   

The exemption is not limited to the spouse and children, but inures to the benefit of the heirs or legatees, and must be liberally construed in their favor.  Coates v. Worthy, 17 So. 606; on suggestion of error, 18 So. 916 (Miss. 1895).

The exempt proceeds are divided among the heirs or legatees on a pro rata basis.  Magee v. Bank of Hattiesburg & Trust Co., 98 So. 541 (Miss. 1923). 

The insurance proceeds must be payable to the executor or administrator of the estate.  In Rice v. Smith, 16 So. 417 (Miss. 1894), the court found the proceeds not to be exempt where the insured had named himself, his executors, administrators and assigns as beneficiaries.  Held that the decedent himself was the true beneficiary, and that his administrator held the proceeds just as if the decedent himself had held them.  This is a curious result, since it seems to presuppose that one may somehow collect one’s own life insurance proceeds.  But the significance of this case is that the statute requires the beneficiary to be the executor or administrator.   

Caveat:  MCA § 85-3-11 disallows the exemption where the decedent can be proven to have used life insurance to defraud creditors. 

Note:  The cases cited are ancient, but I believe them to be good law and I found no negative history.               

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