Life Insurance – Constructive Trust

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WI Court of Appeals – District II

Case Name: Joan C. Pulkkila v. James M. Pulkkila

Case No.: 2018AP712-FT

Officials: Neubauer, C.J., Reilly, P.J., and Hagedorn, J.

Focus: Life Insurance – Constructive Trust

On August 25, 2009, James M. Pulkkila committed to keeping a $250,000 life insurance policy in full force naming his children as “sole and irrevocable primary beneficiaries” until the children reached adulthood as part of a marital settlement agreement (MSA). In 2014, James reneged and changed the beneficiary designation to his new wife. James died a year later, and the $250,000 was paid to his new wife. Joan C. Pulkkila, James’ former wife, appeals the denial of her motion for a constructive trust on behalf of the children.

The equities of this case mandate the creation of a constructive trust in favor of the children so as to accomplish the intent of the MSA. All of the requirements of a constructive trust have been satisfied: James’ new wife received and retained a benefit, which was unjust to James’ children who were denied their guaranteed means of support, and the aforementioned unjust enrichment was the result of James’ wrongful conduct in violating the MSA. Regardless of James’ motive, his designation of his new wife to the exclusion of his children was wrong and inequitable under the terms of the MSA. We also conclude that the remedy provided in the MSA (a lien against the estate) is equally unjust and not a viable remedy as James failed to fund his estate in an amount sufficient to provide the equivalent support for his children. In light of Wisconsin’s strong public policy in favor of properly supporting the children of a dissolving marriage, see Ondrasek v. Tenneson, 158 Wis. 2d 690, 695, 462 N.W.2d 915 (Ct. App. 1990), James’ new wife “in equity and good conscience should not be entitled to beneficial enjoyment” of the insurance proceeds, Wilharms, 93 Wis. 2d at 679. Equity requires the imposition of a constructive trust. We reverse the court’s denial of a constructive trust.

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Derek A Hawkins is trademark corporate counsel for Harley-Davidson. Hawkins oversees the prosecution and maintenance of the Harley-Davidson’s international trademark portfolio in emerging markets.