Equitable Conversion Applies to Insurance Payments

Elder Law Answers case summary.The Supreme Court of the State of Montana holds that the district court was correct in applying the doctrine of equitable conversion to insurance proceeds. In the Matter of the Estate of Ronan (Mont. DA 23-0111, October 24, 2023).

When Ms. Janet Le Ora Ronan died, she left behind a holographic will. The will left her interest in a farm to her son, Thomas Ronan. It stated that she wanted him to have the residence on the farm.

His negotiations with two siblings, who initially contested the will, resulted in a Stipulated Settlement Agreement (SSA). The agreement provided that he would receive 55 percent of the farm, including the residence and outbuildings, and that the other heirs would receive the other 45 percent. The settlement also specified that the remaining heirs had no interest in the farmstead buildings.

A fire destroyed the farmhouse. Then, Thomas Ronan died. His estate assumed his role in the case.

Because of the fire, Ms. Ronan’s estate received two checks from the insurance company: one for the house and another for personal property.

Applying the doctrine of equitable conversion, the district court distributed the money to Thomas Ronan’s estate.

On appeal, the highest court of Montana considers whether the district court clearly erred when it distributed the insurance payments to the estate of Thomas Ronan.

The house was a specific devise. The testator listed her exact interest in it. It was not a general part of the residual estate.

The settlement agreement specifically addressed the farmstead, giving it and 55 percent of the property to Thomas Ronan. Equitable conversion suggests that the insurance proceeds should go to the owner or the farmstead, even though neither the holographic will nor the settlement contemplated them.

Since the farmstead burned after Ms. Ronan’s death, ademption does not apply.

The ownership of the farmstead is not at issue because the settlement agreement states that the outbuildings and home belong to Thomas Ronan.

The Supreme Court affirms the lower court’s application of the doctrine of equitable conversion to insurance proceeds. Giving the estate of Thomas Ronan the insurance money reflects the holographic will and the settlement agreement. While Montana has not applied equitable conversion to insurance proceeds, other states have.

The district court was correct in using the doctrine of equitable conversion to distribute the insurance proceeds to Thomas Ronan’s estate. The will specifically devised the house for Thomas Ronan, and the estate was the insurance beneficiary. Giving the estate of Thomas Ronan the insurance money is consistent with the testator’s intent.

Read the full opinion.