May 31, 2011
Shapiro v. USA: Cohabitant Rights
The Federal Court has, once again, gotten into the area of State Family Law and Estates when the U. S. Court of Appeals for the 9th District ruled on the application of “Marvin-type” facts (Marvin v. Marvin, 557 P.2d 106) that facts on cohabitation could support a deduction on decedent’s estate tax return.
In Estate of Bernard Shapiro et al v. USA, No. 08-17491 DC No 2:06-cv-01149-RCJ-LRL, the couple had set-up housekeeping without the benefit of marriage approximately one year after they started dating. Twenty years later, girlfriend discovered boyfriend had another woman friend and sued him in Nevada State Court for all the Marvin causes of action. While the matter was pending in State Court, boyfriend died. Ultimately, the estate settled with girlfriend.
In filing the estate tax return for boyfriend, estate took a deduction excess of the ultimate settlement, for the amount the claim exposed them to. IRS rejected the deduction. The Tax Court agreed with IRS that, looking at Nevada State Law (which is similar to California’s), girlfriend’s contributions of “22 years of cooking, cleaning, and other homemaking services did not constitute sufficient consideration to allow the estate to deduct her claim against it.”
The Federal Court of Appeals reversed the decision, finding widespread “acceptance of non-marital cohabitation” and an “expansion of co-habitant’s legal rights.” Implied contracts “manifested by conduct” are enforceable.
The “type of consideration necessary to support a contractual agreement between co-habitants” is not the only element to look at. The parties conduct determines “whether their actions support the conclusion that they intend to share their property as though married.”
Although the Nevada Supreme Court has not addressed the sufficiency of homemaking services as adequate consideration for a contract, California has found it to be sufficient [Chiba v. Greenwall (2007) 67 Cal.Rptr.3d 86]. So, the palimony claim was valid under Nevada law. The value of the claim is subject to factual determination.
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John T. Anderson, Section Chair
Certified Specialist in Probate, Trust and Estate Planning
By the California State Bar Board of Legal Specialization
Copyright © 2011 by John T. Anderson
All articles by John T. Anderson may be copied for personal use, only. All articles or outlines from others may be used only with their personal authorization. Any approval is for personal use, only, and for non-commercial purposes.
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