Estate of MacDonald

Margery MacDonald and Robert MacDonald (defendant) married in 1973. Both Margery and Robert had children from prior marriages. Margery worked as a bookkeeper for Robert’s business and was fully acquainted with all of Robert’s assets. In 1984, Margery was diagnosed with terminal cancer, and she worked with Robert to divide their community property so that Margery could clearly allocate her property interests to her children in her will. After the initial property division, Robert’s pension plan, which he had accumulated during his 35 working years, terminated, and Robert received a lump-sum disbursement of approximately $266,000. Robert placed the disbursement into three separate IRA accounts, all of which were titled in Robert’s sole name and all of which named Robert’s children as the sole beneficiaries. Margery signed the spousal-consent portion of each IRA account agreement (spousal-consent forms) consenting to the beneficiary designations. Margery died in 1985. Margery’s estate (plaintiff), represented by Judith Bolton as executrix, filed a petition to establish the estate’s interest in the IRA accounts. It was undisputed that the pension funds were community property at the time of the lump-sum disbursement. Robert challenged, arguing that Margery’s signature on the spousal-consent forms transmuted the community-property pension funds into Robert’s separate property. The trial court agreed and held that the pension funds had been transmuted into Robert’s separate property. The estate appealed, and the appellate court reversed, holding that Margery’s signature on the spousal-consent forms did not constitute the required express declaration of intent necessary to transmute the community-property pension funds into Robert’s separate property. Robert appealed to the California Supreme Court.