Sunday, August 11, 2013

Surviving Domestic Partner has Equitable Subrogation Claim Against Estate

A case decided by the Pennsylvania Superior Court this past week illustrates the kind of complicated estate administration issues that can arise when a “domestic partner” dies. In Re Estate of Devoe, 2013 PA Super 228 (August 8, 2013). 

In 1998 Richard Devoe (Decedent) and his domestic partner, James Mooney, purchased a residence as joint tenants with right of survivorship. In 2008 Decedent took out a bank loan to finance his separate business activities. Mooney had no interest in the Decedent’s business activities. But Mooney did agree to allow the residence to be used as security for Decedent’s loan.
Decedent died in 2009 at age 43 in an accidental fall. He had no will. Under the Pennsylvania laws of intestacy (dying without a will) his brother and sister were named as Co-Administrators of his estate.
The estate delayed paying off the bank loan and the bank foreclosed on the residence which was now owned solely by Mooney. Under the threat of the foreclosure, Mooney sold the residence and paid off the bank loan. He then sought reimbursement from the decedent’s estate.
The trial court denied Mooney’s claim, but the Superior Court reverses. It holds that Mooney had an equitable subrogation claim that the lower court should have considered.   
Due to the Estate’s refusal to pay the bank loan, Mooney had a legal duty to pay it. “The law will not penalize a surety for good faith conduct that resulted in a party being completely and promptly paid.” 
Estate Planning: A Priority for Committed Unmarried Couples
While the court’s opinion does not mention it directly, I suspect that animosity between Decedent’s siblings who administered the estate and their brother’s domestic partner played some role in this litigation.  In my experience a level of antagonism is common in estates involving non-traditional couples.
This problem could have been avoided if the decedent had prepared for the possibility of his unexpected death by having a will. Among other things, the will could have named either Mooney or an objective third party to administer the estate. 
Unmarried couples in long-term committed relationships need to have wills and other estate planning documents in place.  Wills, powers of attorney, health care directives and other legal planning may be even more important for them than for married couples.

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