Under the common law doctrine of exoneration, an heir or devisee is generally entitled to have encumbrances upon real estate paid by the estate unless the will directs otherwise.
At least nineteen states have abrogated the doctrine of exoneration by enactment of Uniform Probate Code § 2-607, which provides for “default non-exoneration”: “A specific devise passes subject to any mortgage interest existing at the date of death, without right of exoneration, regardless of a general directive in the will to pay debts.”
But what happens when the real property is jointly held by the testator and the beneficiary? This is a problem faced regularly by Ohio probate lawyers and elsewhere. Luckily, we can look to decisional probate law and judges of probate opinions for guidance on these questions about the probate process. A Georgia probate court recently addressed the doctrine of exoneration under the circumstances where real property is jointly held by a testator and the beneficiary. In Manders v. King, the Georgia Supreme Court dealt with the estate of Pearl Manders, the deceased mother of siblings William Manders and Janice King. Janice was named the executrix of the estate. In her will, the testatrix Manders bequeathed all her real and personal property to her three children in equal shares per stirpes, and directed that “all my just debts be paid without unnecessary delay by my Executrix….”
William Manders is the owner of a condominium formerly held by him and his mother as joint tenants with right of survivorship. He became the sole owner of the condominium upon the death of his mother. The problem is there was a mortgage on the condo taken out by Pearl when she originally purchased it several years ago. When the executrix refused Mr. Manders’s request that the estate pay the outstanding balance of the note as a debt of the estate, Mr. Manders filed an action in probate court and the case proceeding through the court system all the way to the Georgia Supreme Court.
Georgia is one of several states adhering to the common-law doctrine of exoneration, which provides that, unless a will specifically provides otherwise, an heir or devisee of real property may look to the decedent’s personal property for satisfaction of liens on devised real property, at the expense of the residuary legatees or distributees of the decedent’s personal estate.
The Georgia high court observed that Mr. Manders received the property at issue not by means of descent or devise but as the surviving tenant of a joint tenancy with right of survivorship and concluded that the common-law doctrine of is not applicable to property passing by right of survivorship. The court reasoned that title to said property vests in the survivor immediately at the moment of the death of the joint tenant and is never a part of the estate. As a result, the decedent’s personal representative never has title and cannot use the property to discharge the debts of the decedent.
Next, the Georgia high court noted that Mrs. Pearl’s directive in her will that “all [her] just debts be paid without unnecessary delay” is not a clear expression of the testatrix’s intent that the estate pay the note secured by the deed to secure debt on the property received by Mr. Manders. The court said it was “a generic phrase relating to the payment of debts routinely included in a will and most likely reflects the testatrix’s intent to leave the world with her accounts paid and to be remembered as an upright and respectable person.” Therefore, the court held that the will did not require the estate to discharge the mortgage.
This case is a reminder to Ohio probate lawyers to ensure that when drafting a will, include language that leaves no doubt as to the testator’s expectations that encumbered real property will pass to the beneficiary either with, or without, any debt secured by the property.