Philadelphia Court Gives Priority to Outstanding Child Support Claims Over Distributions to Beneficiaries

          A recent Philadelphia case focused on the liability the executrix may face for improper distribution of the estate proceeds. It also considered exceptions to the "spendthrift provisions" contained in a will or trust. In this case, Roy Creamer Sr., deceased, had a will attempting to distribute the proceeds of his house to his son Roy Jr., who  also had an outstanding $16,289.87 child support obligation. The mother of the children who were owed support filed a formal claim against the estate, saying that the children were entitled to the bequest before Roy Jr.  Roy Sr., the decedent, also failed to provide for his wife in his will, so she filed a spousal election against the estate.

          The executor initially dishonored the claim for child support, stating that only a creditor of the decedent can bring a claim against his estate, and that a creditor of a beneficiary had no standing to bring any claim at all. Furthermore, said the executor, the will contained a "spendthrift provision" which protected claims of beneficiaries against creditors.

          Note #1: each of our clients, and many others who own a will drafted by an attorney, will notice a clause under "Powers of the Personal Representative" which permit them to make payments to any beneficiary without any duty to see to the proper allocation or application of the funds paid. In many cases a trust will contain a provision that the trustee may shield the principle from claims of creditors of the beneficiary. These are similar to "spendthrift provisions."

         Note #2: No matter what a will says, a decedent may not disinherit a spouse. Under Title 20, Section 2203 of Pennsylvania laws, a spouse is entitled to at least 1/3 of the estate. However, in making this election, life insurance, annuities and other payments outside of probate are taken into consideration in computing the 1/3 share.

         In this case the Philadelphia Orphans Court refused to approve the executor's proposed distribution of the estate. The court stated that the children who were owed child support had rights to contest the distribution of the estate to the beneficiary who owed the support obligation. The court went on to say that they also might rights against the spouse taking the 1/3 elective share, and the children might have a right to have a guardian appointed for them to pursue their claim. The court postponed the settling of the estate until the parties determined if there was enough money in the estate to pay the child support obligations, and to see if the parties could resolve the matter without resort to litigation. The case is In re Estate of Creamer, Court of Common Pleas of Philadelphia 14-1760, and the 16 page decision was published on September 30, 2014.

 Stay well until the next post:

Bob Gasparro, Esq.