Divorce Settlement Upheld; Woman’s Estate Keeps $300K

JUNE 8, 1998 VOLUME 5, NUMBER 49

Martha Travers and her husband Richard Travers decided to get divorced after twenty years of marriage. The Phoenix couple was relatively well-off, and (through their lawyers) they agreed that Martha Travers should receive a monthly income designed to represent her interest in the common property plus any right to continued support. The agreement was that Mrs. Travers would receive $3,000 per month for the rest of her life, and that Mr. Travers would purchase an annuity which would guarantee those payments.

The couple and their attorneys signed a divorce settlement agreement incorporating the provision regarding an annuity. Before the settlement had been approved by the court, however, Mrs. Travers’ lawyer contacted her husband’s lawyer and announced that she had changed her mind; rather than monthly payments, she wanted to collect as a lump sum the cost of the annuity her husband had promised to buy. He agreed, and paid her the flat amount of $297,987.95. A new settlement agreement was signed, and the couple was formally divorced ten days later. The agreement was made a part of the divorce, and was approved by the judge.

What Mrs. Travers had not told her husband (or, for that matter, her own lawyer) was that she had received tragic news between the dates of the first and second agreement. Between the two dates, she had learned that her kidneys were failing. In fact, the day before the divorce was finalized she was in the hospital undergoing a kidney biopsy; she was released just long enough to sign the revised settlement agreement and secure the divorce. Two days later, she was back in the hospital, and she died two weeks after that.

As a result of the new agreement, Mrs. Travers’ estate was considerably larger; if she had received monthly payments only until her death, she would have realized only $3,000 from her share of the marital property. Her ex-husband claimed that she had intentionally concealed her medical condition, and that his legal position was adversely affected by her actions. He pointed to court rules requiring both parties to any lawsuit to inform the other side of all information which might prove to be relevant.

Once Mrs. Travers estate was submitted to the probate court, creditors would have four months in which to make their claims. Mr. Travers waited until just before the expiration of that time period before he filed the action charging his ex-wife with concealment. By the time he filed, the divorce had been final for seven months.

Unfortunately for Mr. Travers, the Arizona Court of Appeals ultimately decided that he had only six months from the date of the divorce to make his claim of fraud and misconduct in the divorce proceeding. Mrs. Travers’ death did not extend that time period by the four months given to creditors to make their claims. His request to recover at least some part of the nearly $300,000 he paid to his wife was denied. Estate of Travers, March 26, 1998.

The Travers case points out the kind of issue which can arise under Arizona’s relatively new (and relatively unique) court procedures. Although most litigants assume that they can keep what they know confidential until asked a direct question, in Arizona and a growing number of states the rules have been reversed over the past decade. Now, every party to a lawsuit has an affirmative duty to disclose all relevant information to the other party. Obviously, Mr. Travers would have made an entirely different settlement offer if he realized that his wife’s life expectancy was so dramatically shortened. While her concealment was ultimately successful, it was because her ex-husband failed to act in a timely fashion and not because her behavior was legally proper.

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