Trusts & Estates – Life Insurance – Beneficiaries

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WI Supreme Court

Case Name: Joan C. Pulkkila v. James M. Pulkkila, et al.

Case No.: 2020 WI 34

Focus: Trusts & Estates – Life Insurance – Beneficiaries

The petitioner, Lynnea Landsee-Pulkkila (Lynnea), seeks review of an unpublished, authored decision of the court of appeals applying a constructive trust to proceeds she collected from a life insurance policy maintained by her late husband, James Pulkkila (James). She asserts that the court of appeals erred by determining that a constructive trust is an available remedy and by applying that remedy.

James and Joan Pulkkila (Joan) divorced in 2009. They arrived at a marital settlement agreement (MSA), which the circuit court incorporated in its judgment of divorce. The MSA contained a provision requiring James and Joan to maintain life insurance with their children as beneficiaries. Joan alleges that James breached this provision when he made Lynnea, whom he married in 2013, the sole beneficiary of his life insurance policy. She argues that a constructive trust should be placed on the proceeds.

Lynnea contends that a constructive trust cannot be applied to the life insurance proceeds because the MSA provides that a lien on James’s estate is the exclusive remedy for breach of the life insurance provision. Further, she asserts that the court of appeals erred by applying a constructive trust in the absence of additional proceedings in the circuit court.

We conclude first that the lien provision of the MSA is not an exclusive remedy. Second, we conclude that the court of appeals erred in imposing a constructive trust absent findings of fact that would support such an imposition. We remand to the circuit court to engage in factfinding and subsequently determine whether to impose a constructive trust in the first instance.

Accordingly, we reverse the decision of the court of appeals and remand to the circuit court for further proceedings consistent with this opinion.

Reversed and remanded

Concur:

Dissent: REBECCA GRASSL BRADLEY, J., filed a dissenting opinion.

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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.