In this episode of Rathbone Group’s educational video series on subrogation topics, attorney Kim Rathbone discusses a topic submitted by one of our viewers: how to proceed when a tortfeasor dies in the midst of a subrogation suit.
Who Should a Subrogation Team Pursue if the Tortfeasor Dies?
Once a tortfeasor dies, the proper party in the subrogation matter is the tortfeasor’s estate. Substitution of the Estate in lieu of the deceased is accepted practice because it is simplest procedurally.
Additionally, death does not void a carrier from subrogation pursuit for any insurance coverage the tortfeasor had. This means you can still approach the carrier for recovery. However, the insurer still has the right to argue liability and/or try to negotiate the amount down.
If the deceased tortfeasor’s carrier refuses to pay on the subrogation claim, the lawsuit becomes against the Estate via probate court.
Pursuing Subrogation Recovery Against at Estate in Probate Court
There is a host of evidentiary issues that come with a tortfeasor being unable to testify in a subrogation case. Many subrogation companies, like ours, use skip trace vendors to confirm the tortfeasor’s identity and date of death. Kim cautions that, while skip tracing isn’t 100% accurate, the more identifiers you have, the more accurate it is. Regardless, it is an extremely helpful tool in subrogation cases where the tortfeasor has died.
Once you verify who the tortfeasor is, look for an estate. Sources Rathbone Group recommends include:
- PeopleMap on Westlaw
- Online searches
- Courts of the county last known address
If the tortfeasor has an estate, then a subrogation claim can be filed against it. The deadlines for this type of subrogation process, though laws vary by state, are short. If a subrogation professional does not know about the death and misses the deadlines and the Estate gets resolved, it is too late to have your subrogation claim paid through the Estate.
Estate Payouts: Do Subrogation Claims get Priority?
The appointed Trustee of the Estate is the person with the authority to resolve any subrogation actions. The good news, Kim explains, is that creditors are paid before any will beneficiaries. The bad news: other creditors may have priority over insurance subrogation cases. Examples of this are burial/funeral costs and any end-of-life/hospice medical bills.
In analysis of the Estate’s assets, a subrogation attorney should consider that certain types of property will not go through the probate court, meaning your subrogation recovery may not come from these assets:
- Jointly-owned property, such as homes and bank accounts, automatically go to the joint owner.
- Payable Upon Death accounts
- Retirement accounts
- Some states have homestead exemptions that default any real estate to the will beneficiary.
The Subrogating Side can Open an Estate When there Isn’t One
In cases where there is no estate, depending on the state’s insurance laws and the amount of money you are owed, a subrogating attorney can open an estate. But, there are mitigating factors to consider first:
- Court costs
- Hard time for tortfeasor’s family; might create political issues
- Legal and Trustee fees
- No control over how costs will continue to accrue; cost is a big question mark when opening an estate
- Procedurally difficult without sufficient information about tortfeasor; there are different types of estates
For instance, an Estate may or may not even have a will. There are also small estates, called summary release from administration, which are typically worth less than $100,000, though thresholds vary by state.
The main concern here, according to Kim, is as a subrogating attorney, you do not want to open the wrong type of estate, but sometimes there is not enough information about the tortfeasor to know. There is also net subrogation recovery to consider: after the costs of opening an estate, will the recovery outweigh those costs? Auto and property insurance claims, for instance, are not usually large balances, so may not be worth pursuing.As a subrogation-focused law firm, we are invested in educating subrogation professionals on the nuanced and sometimes tricky processes of insurance and subrogation law. If you have other questions, feel free to submit them to the Rathbone Group subrogation team, and check out our podcasts and YouTube channels for more educational discussions about all things subrogation.