Present: All the Justices
JOHN R. CHAPPELL, EXECUTOR OF THE
ESTATE OF CAROLE K. CHAPPELL
v. Record No. 022966 OPINION BY JUSTICE ELIZABETH B. LACY
October 31, 2003
WALTER H. PERKINS
FROM THE CIRCUIT COURT OF NORTHAMPTON COUNTY
Glen Allen Tyler, Judge
In this appeal, John R. Chappell, Executor of the Estate
of Carole K. Chappell (Estate), asks us to reverse the
judgment of the trial court establishing the elective share of
the surviving spouse, Walter H. Perkins, pursuant to Code
§ 64.1-16.1. Because we conclude that the circuit court did
not err in applying Code § 64.1-16.1 1 as it existed at the time
of Carole's death, in placing the burden of proof on the
Estate to establish that certain property should be excluded
from Carole's augmented estate, and in including certain
property in the augmented estate, we will affirm the judgment
of the trial court.
FACTS AND PROCEEDINGS
Walter and Carole were married from 1988 until Carole's
death in 1997. Both had children from prior marriages, but
they had none together. Walter was not a beneficiary under
Carole's will.
1
For convenience of reference, the current subsection
numbering is used in this opinion.
Walter timely filed a claim for his elective share of
Carole's augmented estate pursuant to Code § 64.1-13. He
subsequently filed a petition asking the Circuit Court of the
County of Northampton to determine the amount of that share,
asserting that the Estate improperly excluded certain property
from the augmented estate. 2
The property at issue included two investment accounts
and a parcel of real property known as the Elliotts Creek
property, all held in Carole's name. 3 The Estate asserted that
the funds in the investment accounts were proceeds Carole
received from her first husband's retirement program following
his death, from her first husband's life insurance policy, and
from the sale of their home.
Walter and Carole purchased the Elliotts Creek property
in 1989 as tenants by the entirety. In 1991, they jointly
executed a deed of gift conveying the property solely to
Carole in fee simple. In 1992, they built a residence on the
property with funds from the sale of other jointly owned
2
The petition initially named the Estate and Carole's
four children as respondents. The children did not file a
response or make an appearance in the proceedings before the
trial court.
3
The Estate also assigns error to the failure of the
circuit court to exclude from the augmented estate certain
bank accounts held solely in Carole's name. However, the
Estate presented no argument regarding the bank accounts and
we limit our consideration to the investment accounts and the
Elliotts Creek property.
2
property, a construction loan secured by securities owned by
Carole, and funds contributed by both Carole and Walter.
Carole transferred the property to the Carole K. Chappell
Revocable Living Trust in 1997.
Following an evidentiary hearing, the trial court held
that the Estate, as the party urging the exclusions, bore the
burden of establishing that property should be excluded from
the augmented estate under Subsection B of Code § 64.1-16.1
and that the provisions of Code § 64.1-16.1 in effect at the
time of Carole's death applied in this case. Based on these
holdings the trial court concluded that the investment
accounts and the Elliotts Creek property should be included in
Carole's augmented estate. The Estate challenges each of
these holdings in this appeal.
DISCUSSION
In 1991, the General Assembly replaced the former
doctrines of dower and curtesy with a system of property
rights for surviving spouses known as the augmented estate.
Code §§ 64.1-13 through -16.4. The new system allows a
surviving spouse to claim a statutory fraction of the
decedent's augmented estate. At issue in this appeal is the
application of Code § 64.1-16.1, the statute that establishes
the content of a decedent's augmented estate.
A. Burden of Proof
3
As a threshold matter, the Estate challenges the circuit
court's ruling that the Estate had the burden of establishing
that Carole's investment accounts and the Elliotts Creek
property should be excluded from the augmented estate pursuant
to Subsection B of Code § 64.1-16.1. Noting that the
augmented estate statutes are silent with regard to burdens of
proof and that this Court has not previously resolved this
issue, the Estate suggests that the circuit court should have
adopted a "prima facie case" approach based on which party has
the "best available information" concerning the decedent's
estate. That party would have the initial burden to establish
the augmented estate and the amount of the elective share.
Any challenger would carry the burden of providing evidence to
support a change in the initial determination. We reject the
Estate's proposal and find no error in the circuit court's
refusal to adopt a system that shifts burdens of proof based
on the locus of information in each case.
The legislation defining the augmented estate begins with
the value of the property in the decedent's probate estate.
That value is increased by the value of certain property
previously transferred by the decedent. Code § 64.1-16.1(A).
The value of the augmented estate is then decreased by
excluding the value of certain property identified in
Subsection B of Code § 64.1-16.1. Predictably, litigation
4
over the contents of the augmented estate will ensue when the
representatives of the estate and the surviving spouse cannot
agree on the proper application of Code § 64.1-16.1. By
definition, the surviving spouse will benefit from those
provisions that increase the size of the augmented estate, and
the beneficiaries or heirs will benefit from those provisions
that decrease its size. 4
The petition to establish the amount of the elective
share may be filed by the surviving spouse, the decedent's
personal representative, or any party in interest. Code
§ 64.1-16.2(D). Regardless of who files the petition invoking
judicial intervention, we conclude that the party seeking
inclusion of property under Subsection A of Code § 64.1-16.1
has the burden of proof under that subsection and the party
seeking exclusion of property under Subsection B of that
section carries the burden of establishing such exclusion.
Accordingly, the circuit court did not err in placing on the
Estate the burden to establish that the investment accounts
and the Elliotts Creek property should be excluded from the
augmented estate pursuant to Subsection B of Code § 64.1-16.1.
B. The Investment Accounts
4
The provisions of the augmented estate apply whether the
decedent dies testate or intestate. Code § 64.1-13.
5
The Estate next asserts that, if the circuit court had
properly applied Subsection B of Code § 64.1-16.1, the
investment accounts would have been excluded from the
augmented estate under subparagraph (ii) of that subsection.
That subsection provides in pertinent part:
B. Nothing herein shall cause to be included in
the augmented estate . . . (ii) the value of any
property, its income or proceeds, received by
the decedent by gift, will, intestate
succession, or any other method or form of
transfer to the extent it is received without
full consideration in money or money's worth,
before or during the marriage to the surviving
spouse, from a person other than the surviving
spouse to the extent such property, income, or
proceeds were maintained by the decedent as
separate property[.]
(Emphasis added.)
The General Assembly added the italicized language to the
statute in 1999, two years after Carole's death. The circuit
court applied the subsection as it existed at the time of
Carole's death, concluding that the 1999 amendment affected
substantive rights and therefore could not be applied
retroactively. Code § 1-16; Shiflet v. Eller, 228 Va. 115,
120, 319 S.E.2d 750, 753 (1984).
The Estate asserts that this holding was erroneous for
two reasons. First, it contends that the 1999 amendment did
not affect substantive rights. Code § 64.1-13, according to
the Estate, provides the substantive right to claim the
6
elective share, and Code § 64.1-16.1 only prescribes the
procedure for determining which property is to be included in
the augmented estate. Therefore, the Estate concludes, the
1999 amendment to Code § 64.1-16.1, like the section itself,
affects only the procedure for determining the contents of the
augmented estate and is not substantive in nature. We
disagree.
We have described a procedural statute as one prescribing
methods of enforcing rights. Shiflet, 228 Va. at 120, 319
S.E.2d at 753-54. Code § 64.1-16.1 does not prescribe a
method of enforcing the right to an elective share of an
augmented estate; it defines the content of an augmented
estate. The surviving spouse is entitled to a specific
interest in the augmented estate as defined by the terms of
Code § 64.1-16.1 at the time of a decedent's death. A
subsequent amendment that changes the elements of the
augmented estate also changes the surviving spouse's interest.
Such a change in a previously established interest is
substantive, not procedural.
The Estate goes on to argue that, even if Code § 64.1-
16.1 affects substantive rights, the 1999 amendment did not
affect those rights, because that amendment merely clarified
existing law. The Estate argues that the word "gift"
contained in the subsection prior to 1999 included any
7
property received without full consideration and that the 1999
amendment merely clarified existing law. Rules of statutory
construction preclude adoption of the Estate's position.
Legislation is presumed to effect a change in the law
unless there is clear indication that the General Assembly
intended that the legislation declare or explain existing law.
Boyd v. Commonwealth, 216 Va. 16, 20, 215 S.E.2d 915, 918
(1975) (per curiam). Nothing in the 1999 amendment indicates
that the General Assembly enacted the amendment as a
clarification of existing law. See 1997 Acts, ch. 565
(stating that changes to Code § 8.01-249 "are declaratory of
existing law").
Rules of statutory construction also assume that words in
a statute are read according to their common meaning; however,
if a term has a known legal definition, that definition will
apply unless it is apparent that the legislature intended
otherwise. Price v. Harrison, 72 Va. (31 Gratt.) 114, 117-18
(1878). "Gift" is a commonly used legal term and there is
nothing to indicate that the General Assembly intended that
the term have some other or additional meaning in this
statute. A "gift" requires donative capacity and intent,
delivery, and acceptance. See generally Taylor v. Smith, 199
Va. 871, 874, 102 S.E.2d 160, 162 (1958). The term does not
include the mere receipt of property "without full
8
consideration in money or money's worth." Indeed, at oral
argument, counsel for the Estate could not identify any
instance in which the receipt of funds from an insurance
policy, from a retirement plan, from the sale of a house, or
by operation of law qualified as receipt of property by gift.
For these reasons we conclude that the circuit court did
not err in applying Code § 64.1-16.1 as it existed at the time
of Carole's death in 1997. Furthermore, because there is no
evidence in this record showing that the funds in the
investment accounts came from a gift, a will, or intestate
succession, the circuit court did not err in holding that the
Estate failed to carry its burden to establish that investment
accounts should be excluded from the augmented estate under
Subsection B of Code § 64.1-16.1.
C. The Elliotts Creek Property
Finally, the Estate asserts that the circuit court erred
in concluding that the value of the Elliotts Creek property
was part of Carole's augmented estate because Carole had not
"transferred the property pursuant to Virginia Code § 64.1-
16.1(B)(i) prior to her death." The Estate argues that the
transfer of the property by Carole and Walter to Carole in
1991 was a transfer of property by Carole made with the
written consent or joinder of Walter and therefore, that the
value of the property should be excluded from Carole's
9
augmented estate under Code § 64.1-16.1(B)(i). The Estate's
position is based on the literal application of subparagraph
(B)(i) and the provisions of Code § 55-41. We reject the
Estate's arguments.
The provision at issue provides:
B. Nothing herein shall cause to be included in
the augmented estate (i) the value of the property
transferred by the decedent during marriage with
the written consent or joinder of the surviving
spouse.
The Estate argues that a plain reading of this subparagraph is
that, once consent to the transfer of the property is made,
the value of that property can never be included in the
transferring spouse's estate. Such an application of the
statutory provision leads to absurd results. For example, if
the transferring spouse subsequently repurchases the
transferred property, under the Estate's construction of
Subsection (B)(i), that property could never be part of the
transferring spouse's augmented estate, even though the
property was part of the transferring spouse's probate estate
because of the subsequent reacquisition. Accordingly, the
provision eliminates value attached to a specific conveyance
of property, not to specific property.
The Estate's construction is also inconsistent with the
purpose of the augmented estate legislation, which is to
prevent one spouse from disinheriting the other by
10
transferring property prior to the transferor's death and
thereby diminishing the transferor's estate. To achieve this
purpose, the value of certain property transferred by the
decedent during marriage is imputed to the decedent's
augmented estate. Code § 64.1-16.1(A)(3). If, however, a
spouse had agreed to the transfer, the value of the
transferred property is not included in the transferring
spouse's augmented estate. Code § 64.1-16.1(B)(i). This
exception is based on principles of fairness. When a spouse
agrees to a transfer of property that diminishes the
transferor's estate, that spouse should not be allowed to
reclaim the value of the transferred property in the
transferring spouse's augmented estate. See J. William Gray,
Jr., Virginia's Augmented Estate System: An Overview, 24 U.
Rich. L. Rev. 513, 523 (1990).
If a transfer does not remove the property from the
transferring spouse's estate, the consent of the non-
transferring spouse, while a consent to the transfer, is not a
consent to any diminution in the estate by virtue of that
transfer. Accordingly, we conclude that that subparagraph
(B)(i) of Code § 64.1-16.1 applies when a spouse consents to a
specific conveyance that removes the property from, or
decreases the value of, the transferring spouse's estate.
11
We also reject the Estate's contention that Code § 55-41
specifically provides that when a husband and wife join in a
deed of conveyance, the provisions of Code § 64.1-16.1(B)(i)
are satisfied. The Estate reads Code § 55-41 too broadly.
Code § 55-41 states in pertinent part:
When a husband and his wife have signed and
delivered a writing purporting to convey any
estate, real or personal, such writing . . .
shall . . . operate to manifest the spouse's
written consent or joinder, as contemplated in
Code § 64.1-16.1 to the transfer embraced therein
. . . . [and] the writing passes from such spouse
. . . all right, title and interest of every
nature[.]
This provision declares only that a signed and delivered
writing in which both spouses convey property meets the
requirement of a spouse's "written consent or joinder" in Code
§ 64.1-16.1(B)(i). That statute does not address whether a
specific conveyance is the type of transfer that requires
exclusion of the property's value from the augmented estate of
the transferring spouse under Subsection (B)(i).
In this case, the transfer of the Elliotts Creek property
to Carole in fee simple did not remove the property from, or
decrease the value of, Carole's estate. Although consenting
to that transfer, Walter did not consent to a decrease in the
value of Carole's estate. Accordingly, the conveyance was not
subject to Code § 64.1-16.1(B)(i) because it did not result in
the diminution of Carole's estate and, therefore, the circuit
12
court did not err in including the Elliotts Creek property in
Carole's augmented estate.
For these reasons we affirm the judgment of the trial
court.
Affirmed.
13