Here is how to lose your grandmother’s 4.15 carat marquise cut diamond ring to your former wife.
First, when your grandmother dies, become the administrator of her estate.
Second, pull your grandmother’s very valuable diamond ring from the custodian account in a New York bank and have it sent to you. Do this even though you have not settled the entire estate, and you are not the only beneficiary entitled to the estate.
Third, give your fiancée the ring, and do not protest when she takes to a jeweler to mount the diamond in a new setting.
Fourth, get married and then promptly get divorced.
Intrigued? Here is how this story played out, according to the 1977 court of appeals opinion. Grandmother died, leaving a will that named her grandson and several others as beneficiaries. Grandson’s share of the estate was 28.33%.
Grandmother’s will was admitted to probate, and grandson named estate administrator. That meant he had a duty to gather her assets, pay her debts, and then distribute what was left to the beneficiaries.
Grandson apparently had his eye on grandmother’s jewelry. He distributed several pieces to himself including the 4.15 carat marquise cut diamond ring. He then gave the ring to his beloved fiancé. She promptly popped over to the jeweler’s and had the diamond placed in a new setting.
Grandson and fiancé got married and divorced. The divorce court determined that grandson’s wife got to keep the ring, but ordered that it remain in a safety deposit box for a year to give the other beneficiaries time to assert a claim against it.
Grandson and grandmother’s other beneficiaries were not happy, but the result stood in the appellate court.
Here is why. When grandmother died, her assets immediately “vested” in the beneficiaries. That means each beneficiary owned an undivided share of the assets, subject only to the claims of grandmother’s creditors.
So grandson owned 28 1/3 % of the ring. He had a right to give away his share of the estate. He did just that. The divorce court had a right to determine the property interests of the divorcing couple, and it decided to believe wife’s version that grandson gave her the ring as an engagement ring prior to their marriage, which made it her separate property.
But what about the other beneficiaries’ right to their 71 2/3% of the ring? Well, the beneficiaries were not parties to the divorce, so their rights could not be determined by the divorce court. The divorce court, instead, secured the ring and gave the beneficiaries a year to pursue their claim in the probate court.
Apparently the probate court was unsympathetic.
Lessons learned:
- An administrator should not make an early, unequal distribution out of the probate estate.
- A beneficiary should maintain an active interest in how an estate is being handled and demand regular accountings.
- There should be a mutual agreement about whether a gift is being made at the time an asset is transferred.
Hammerle Finley Law Firm. Give us a call. We can help.
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The information contained in this article is general information only and does not constitute legal advice.
