IN ESTATE LITIGATION, WHAT'S OLD IS NEW AGAIN

Picture your client:  the executor of an estate. 

She wants to know from you whether and how to pay a mortgage that encumbered the decedent’s real estate.  The decedent was the sole party liable on the loan, which was secured by the real estate in question. Your trouble, and the executor’s, is two-fold.  The real estate was held with rights of survivorship with the decedent’s second spouse. And, of course, the decedent’s children don’t want their stepmother, who takes the property, to have the loan paid off for her by the executor. The children therefore point to the article of the will forbidding the executor to pay any debt secured by mortgage of real property “owned at death,” and requiring “such property [to] pass subject to such mortgage.”

In short, the second spouse says, “pay the mortgage, but not from my real estate,” and the children say, “you can’t pay the mortgage, because it must pass to our dear stepmother with the lien on the property.”  What to do?

If you said get the court’s aid and guidance, you’d be one step ahead of the curve.  The trial court reasoned that the will’s intent was to pass the property subject to the lien.  And the will’s stated intent must ultimately control, right?  

The Virginia Supreme Court, in Dolby v. Dolby, reversed the trial court.  The Supreme Court held that the estate was obligated to pay the decedent’s mortgage debt and that because the real estate passed outside of the probate estate by operation of law—namely, pursuant to the survivorship clause in the deed—the provision in the will relied upon by the decedent’s children did not apply.  The Court’s decision, issued in 2010, relied upon the principle that the duty of an executor of an estate is to first pay the decedent’s debts.  In doing so, the Court cited to Edmunds v. Scott, a prior decision of the Court.  The Scott opinion was issued in 1884.

Comments

[James1stCav71-91]

Saw your blog on the T&E Prof's blog. Good job. Keep it up.

[Yanklawyer]

The VA S Ct still cites to its 1884 opinions...in 2010? Guess y'all must subscribe to a good citator service! Nice post, Yama.