In re Marriage of Velasquez

No. 3--97--0293
_________________________________________________________________

IN THE APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

A.D., 1998

IN RE THE MARRIAGE OF: ) Appeal from the Circuit Court
SHIRLEY ANN VELASQUEZ, ) for the 18th Judicial Circuit,
) DuPage County, Illinois
Plaintiff-Appellant )
Cross-Appellee, )
) No. 91--D--934
v. )
)
ANGELO VELASQUEZ, )
) Honorable
Defendant-Appellee ) Kathryn E. Creswell
Cross-Appellant. ) Judge, Presiding
_________________________________________________________________

JUSTICE BRESLIN delivered the opinion of the court:
_________________________________________________________________

At issue in this case is whether a waiver provision in a
marital settlement agreement waives any interest, expectancy or
otherwise, in assets specifically listed in the marital settlement
agreement. We hold that the waiver provision is sufficient to
waive plaintiff Shirley Ann Velasquez's interest in a land trust
because the real estate held in the trust was specifically listed
as an asset in the agreement. However, we hold that the waiver
provision does not waive Shirley's interest in an insurance policy
that was not listed in the agreement. Accordingly, we affirm.
FACTS
In 1984, Shirley's husband, Angelo Velasquez, created a land
trust holding real property known as 5228 through 5236 West 25th
Street, Cicero, Illinois, as an asset. Angelo remained the sole
owner of the property and retained the power to assign or transfer
the beneficial interest in the land trust. Shirley was the named
beneficiary of the trust.
In July 1992, Shirley and Angelo divorced. The judgment of
dissolution order incorporated a written marital settlement
agreement. Among other marital assets, the agreement listed Angelo
as the owner of two insurance policies: an All American policy and
a Royal MacCabees Life Insurance policy (Royal). Shirley received
the marital residence and several other marital assets. Angelo was
awarded the real estate located at 5228 through 5236 West 25th
Street and the cash surrender value of his insurance policies. The
agreement further provided that Angelo would pay Shirley monthly
maintenance payments and that the payments would be secured by the
Royal policy. These payments were to be used to discharge the
couple's obligations under their first mortgage, including real
estate taxes.
The settlement agreement contained a mutual release clause
that stated, in relevant part:
"To the fullest extent permitted by law, and except as
otherwise herein expressly provided, each party
relinquishes, waives, remises, and releases all rights
and claims against the other party and his or her agents,
attorneys, and employees, and each party hereby
relinquishes, waives, remises, and releases to the other,
his or her heirs, personal representatives and assigns,
all rights of maintenance, alimony, spousal support,
inheritance, descent and distribution, homestead, dower,
community property, and all other rights, titles, claims,
interests and estates as husband and wife, widow or
widower, whether existing by reason of the marital
relation between said parties or otherwise, including any
and all right, title, claim, or interest which he or she
otherwise has or might have or be entitled to claim in,
to, or against the property, assets, and estate of the
other, whether real, personal, or mixed, whether marital
or non-marital, whether community or separate, whether
now owned or hereafter in any manner acquired by the
other party, whether in possession or in expectancy and
whether vested or contingent."
Angelo died in July, 1996. Shortly thereafter, Shirley filed
a petition to compel, requesting the death benefits from the Royal
policy. In response, the executor of Angelo's estate (Executor)
filed a counter-petition asking the court to compel Shirley to
assign the beneficial interest in the land trust to the estate.
This interest passed to Shirley at Angelo's death according to the
beneficiary designation clause contained in the land trust
agreement. The Executor also requested that the proceeds of a John
Hancock Life Insurance policy (John Hancock), which named Shirley
as the beneficiary, be paid to the estate.
During the first hearing, the defendants attempted to present
testimony from Angelo's attorney, Julie Kaminski. The defendants
claimed that she would testify as to Angelo's intent to change the
beneficiary of the land trust and the insurance policy. The trial
court refused to allow her testimony, stating that it was
inappropriate at that point in the proceedings. Subsequently, the
trial court ordered the proceeds of the Royal policy and the John
Hancock policy be paid to Shirley. The court also ordered Shirley
to assign her interest in the land trust to Angelo's estate and
ordered the estate to pay real estate taxes on the marital
residence until August of 2002. Both parties appeal.
DISCUSSION
Effect of Waiver on Land Trust
The primary issue on appeal is whether the waiver provision
contained in the marital settlement agreement waives Shirley's
expectancy interest as a contingent beneficiary of the land trust.
A divorce does not terminate property rights of a husband and
wife which exist independent of the marriage. Leahy v. Leahy-
Schuett, 211 Ill. App. 3d 394, 570 N.E.2d 407 (1991). However, a
dissolution agreement may extinguish a divorced spouse's expectancy
interest in a land trust or an insurance policy if the agreement
includes a clear expression of the spouse's waiver of that
interest. In re Marriage of Myers, 257 Ill. App. 3d 560, 628 N.E.2d 1088 (1993); Deida v. Murphy, 271 Ill. App. 3d 296, 647 N.E.2d 1109
(1995). To determine the effect of a waiver, two factors must be
considered: (1) whether the asset in dispute was specifically
listed as a marital asset and awarded to a spouse; and (2) whether
the waiver provision contained in the settlement agreement
specifically states that the parties are waiving any expectancy or
beneficial interest in that asset. See Leahy, 211 Ill. App. 3d at
400, 570 N.E.2d at 411 (1991); Principal Mutual Life Insurance Co.
v. Juntunen, 189 Ill. App. 3d 224, 545 N.E.2d 224 (1989). This
court's review of the interpretation of a waiver provision included
in a contractual agreement is de novo. Best Coin-Op, Inc. v. Old
Willow Falls Condominium Association, 120 Ill. App. 3d 830, 458 N.E.2d 998 (1983).
Shirley asserts that the waiver provision does not contain a
specific waiver of her expectancy interest as a contingent
beneficiary of the land trust. She contends that the waiver
provision in this case is comparable to the provision analyzed in
Williams v. Gatling, 186 Ill. App. 3d 21, 542 N.E.2d 121 (1989).
In Williams, the two assets at issue were an insurance policy
and an employee stock ownership plan. Neither were listed as
marital assets or awarded in the settlement agreement. The court
refused to apply a broadly worded waiver provision in the
agreement, not because the terms of the waiver provision were too
general, but because the assets in dispute were not specifically
listed as marital assets. Williams, 186 Ill. App. 3d 21, 542 N.E.2d 121. Therefore, Williams is not comparable to this case because
the land trust in the instant case was identified as an asset in
the agreement.
Instead, we are persuaded by the court's analysis in
Principal. In Principal, 189 Ill. App. 3d at 226, 545 N.E.2d at
225, the waiver mentioned any interest, beneficial or otherwise,
and it specified that the parties waived those interests as "to
life insurance policy(ies) owned by the other." Although the
waiver did not make an express reference to a particular property
interest owned by the other party, the court concluded that the
wife's expectancy interest in her husband's life insurance policy
was included in the scope of the waiver because the waiver
expressly barred any expectancy interest in an insurance policy.
Principal, 189 Ill. App. 3d at 228, 545 N.E.2d at 226.
Similarly, the Velasquez marital settlement agreement waives
any interest, expectancy or otherwise, in "the property *** of the
other, whether real, personal, or mixed." The real property held
in the land trust was listed as an asset and awarded to Angelo
pursuant to the settlement agreement. Thus, even though the waiver
provision in this case did not specifically mention the land trust,
we hold that it waives any expectancy interest Shirley has in the
real estate held in the trust.
Shirley also asserts that her expectancy interest as a
retained beneficiary can only be affected if the settlement
agreement expressly waives any "expectancy" or "beneficial"
interest in the property.
While we agree that a waiver provision should specifically
waive an expectancy interest (see Leahy, 211 Ill. App. 3d 394, 570 N.E.2d 407 (a waiver provision that does not refer to an expectancy
or beneficial interest does not waive any expectancy interest in
property owned by the other)), we disagree with Shirley's
contention that the waiver at issue fails to meet that requirement.
The waiver provision included in the settlement agreement
specifically and expressly applies to any interest "whether in
possession or in expectancy and whether vested or contingent."
Thus, the settlement agreement does contain an express waiver of
Shirley's expectancy interest in the land trust.
Shirley argues that the provision must expressly indicate that
she is waiving any expectancy interest in Angelo's real estate held
in the land trust to effectively waive that interest. However,
the purpose of a waiver provision is to act as a safeguard and
protect both parties from those interests and contingencies that
may unexpectedly vest in the former spouse at some future point in
time. See Principal, 189 Ill. App. 3d at 228, 545 N.E.2d at 226.
(the logical implication of the language of a waiver is that each
spouse intended to relinquish any rights and interests that they
may have otherwise possessed). Thus, it would defeat the very
purpose of a waiver provision for this court to find that the
waiver at issue is an ineffective general waiver due to the
drafter's failure to expressly enumerate every specific property
interest. Accordingly, we hold that the waiver provision in the
settlement agreement waived Shirley's expectancy interest as a
contingent beneficiary in the land trust.
Effect of Waiver on Life Insurance Policy
The next issue we must address is whether the waiver provision
waives any right Shirley may have had in the proceeds of the John
Hancock policy.
It is well settled that unless specifically provided for in
the marital settlement agreement, a former spouse is not precluded
from collecting the other spouse's insurance policy proceeds as a
named beneficiary. Williams v. Gatling, 186 Ill. App. 3d 21, 542 N.E.2d 121 (1989); Cox v. Employers Life Insurance Co., 25 Ill.
App. 3d 12, 322 N.E.2d 555 (1975); O'Toole v. Central Laborers'
Pension & Welfare Funds, 12 Ill. App. 3d 995, 299 N.E.2d 392
(1973).
Shirley's attorney drafted Angelo's financial affidavit. The
John Hancock policy was not mentioned in that affidavit or the
settlement agreement. The Executor contends that this court should
ignore the omission of the policy from the agreement and award the
proceeds of the policy to the estate. We disagree.
As we previously recognized, specificity is required for a
waiver provision to be effective. Angelo's failure to disclose the
existence of the John Hancock policy prevents any waiver of an
expectancy interest from operating to defeat Shirley's claim to the
proceeds. See Williams, 186 Ill. App. 3d at 22, 542 N.E.2d at 123
(holding that a divorce decree containing a broadly worded waiver,
but failing to mention a specific insurance policy or pension
account, could not defeat the wife's claim to those proceeds).
Angelo's duty to disclose was not discharged simply because
Shirley's attorney drafted the affidavit. Thus, although perhaps
inadvertent, Angelo's failure to list the John Hancock policy as an
asset bars his estate from precluding Shirley's recovery of the
proceeds under the settlement agreement.
But the Executor argues that Angelo's intent to change the
named beneficiary of the John Hancock policy was relevant and the
court committed reversible error by refusing to permit Angelo's
attorney to testify. The Executor contends that, based on Angelo's
intent, the court should have awarded the proceeds of the policy to
the estate.
We agree with the Executor's contention that intent is
relevant. In determining whether the decedent took sufficient
steps to change the named beneficiary of a life insurance policy
before his death, the threshold question is the firmness of the
decedent's intent to make the change. Dooley v. James A. Dooley
Associates Employees Retirement Plan, 92 Ill. 2d 476, 442 N.E.2d 222 (1982). The courts have developed a "substantial compliance"
test to ascertain whether the decedent actually intended to change
the beneficiary named on the policy even though he failed to
complete the change in writing. See Dooley, 92 Ill. 2d at 484, 442 N.E.2d at 226. Substantial compliance with the insurance policy
guidelines for changing the beneficiary requires that the evidence
establish intent on the part of the insured to make the change and
that positive steps have been taken toward achieving the change.
Principal Mutual Life Insurance Co. v. Juntunen, 189 Ill. App. 3d
224, 545 N.E.2d 224 (1989).
In the instant case, we cannot say that the court committed
reversible error by excluding the testimony regarding Angelo's
intent. The key to preserving the record and properly saving error
is the offer of proof. People v. Andrews, 146 Ill. 2d 413, 588 N.E.2d 1126 (1992). The purpose of the offer of proof is to
disclose the witness and the nature of the offered testimony for
the information of the trial judge and opposing counsel, and to
allow the reviewing court to consider whether the exclusion was
erroneous and harmful. Little v. Tuscola Stone Co., 234 Ill. App.
3d 726, 600 N.E.2d 1270 (1992).
At the initial hearing on the motion to compel payment, the
Executor offered the testimony of Kaminski, Angelo's attorney. The
court refused to allow this testimony, stating that the offer was
premature. The Executor's counsel then failed to make an offer of
proof to indicate the premise of Kaminski's testimony. Morevoer,
she failed to make an offer of proof at any time during the three
subsequent hearings. Accordingly, we must affirm the trial court's
decision to exclude Kaminski's testimony.
Real Estate Taxes
The last issue we must consider is whether the decedent's
estate is obligated to pay the real estate taxes on the parties'
martial residence until August, 2002.
A marital settlement agreement is governed by the laws of
contractual interpretation. In re Marriage of Olsen, 124 Ill. 2d 19, 528 N.E.2d 684 (1988). In general, a contract should be given
a fair and reasonable interpretation based on the consideration of
all its language and provisions. Shelton v. Andres, 106 Ill. 2d 153, 478 N.E.2d 311 (1985). In construing this language, a court
should attempt to give effect to the intention of the parties at
the time they entered into the contract. USG Corp. v. Sterling
Plumbing Group, Inc., 247 Ill. App. 3d 316, 617 N.E.2d 69 (1993).
The interpretation of a contract is a question of law to be
reviewed de novo. Illinois Valley Asphalt, Inc. v. LaSalle National
Bank, 54 Ill. App. 3d 317, 369 N.E.2d 525 (1977).
The Executor contends that because the settlement agreement
does not contain a specific provision requiring the payment of the
real estate taxes to continue in the event that the mortgage is
prepaid, the trial court incorrectly ordered the estate to continue
paying taxes until August of 2002.
The payment of real estate taxes on the marital residence was
specifically defined in the settlement agreement as part of
Angelo's maintenance payments to Shirley. Those payments, equal to
the first mortgage, including principal, interest and real estate
taxes, were acknowledged by both parties as payments incident to
the judgment of dissolution and in discharge of Angelo's legal
obligation to support Shirley. The only event that could have
resulted in the termination of those payments was Shirley's sale of
the marital residence. A reasonable interpretation of this
maintenance payment agreement is that the payments would continue
until the maturity date of the first mortgage in the year 2002.
Accordingly, we affirm the trial court's decision holding the
estate responsible for the payment of the real estate taxes through
the first mortgage's maturity date.
For the foregoing reasons, the judgment of the circuit court
of DuPage County is affirmed.
Affirmed.
HOMER, J., concur.
HOLDRIDGE, J., partial concurrence/partial dissent.

JUSTICE HOLDRIDGE, concurring in part and dissenting in part:

I agree with the majority's statement that a divorce does not
terminate property rights of a husband and wife that exist
independently of the marriage. Leahy v. Leahy-Schuett, 211 Ill.
App. 3d 394 (1991). I agree with the majority's statement that a
dissolution agreement may extinguish a divorced spouse's expectancy
interest in a land trust or insurance policy if the agreement
includes a clear expression of the spouse's waiver of that
interest. In re Marriage of Myers, 257 Ill. App. 3d 560 (1993).
I also agree with the majority's statement that two factors
determine the effect of a waiver provision in a marital settlement
agreement on a specific expectancy interest in dispute: (1)whether
the expectancy interest in dispute was specifically listed as a
marital asset and awarded to a spouse; and (2) whether the waiver
provision contained in the settlement agreement specifically states
that the parties are waiving any expectancy or beneficial interest
in that asset. See, Leahy, 211 Ill. App. 3d at 400.
I agree with the majority's statement that the holding in
Leahy is relevant to the instant matter. In Leahy, the wife held
a beneficial interest in an Illinois land trust the corpus of which
was a commercial building. In the marital settlement agreement,
the husband was awarded the building "free and clear of any claim
whatsoever" by the wife in the marital settlement agreement.
Leahy, 211 Ill. App. 3d at 396. The husband died testate and
assigned the building to his children. The court held that general
release contained in the marital settlement agreement did not
extinguish the wife's beneficial interest in the land trust.
I also strongly agree with the majority's statement that
specificity is required for a waiver to be effective; and I agree
completely with the majority's statement that a divorce decree that
contains a broadly worded waiver, but fails to mention a specific
insurance policy, pension account, i.e. an expectancy interest in
a specific asset, cannot defeat the named beneficiary's claim to
that expectancy.
I even agree with the majority's holding that the general
release provision in the Velasquez marital settlement agreement was
not sufficient to waive Shirley Velasquez's claim to the proceeds
of the insurance policy.
In view of the above well-settled law, law correctly cited by
the majority, I fail to see how the general release provision of
the Velasquez marital settlement agreement is sufficient to waive
Shirley Velasquez's beneficial interest in the land trust. I would
reverse the trial court's holding that she waived her beneficial
interest in the land trust, and I therefore, respectfully, dissent
from that portion of the opinion.