IMPORTANCE OF PROBATE IN WRONGFUL DEATH CASES – PART 1

In a Wrongful Death case, a personal representative must be appointed to administer the estate,
which includes the filing of the complaint for the personal injury on behalf of the decedent’s
estate. While this process seems simple, it can be more complicated than what first meets the
eye. A number of issues must be considered:

1. Who is Personal Representative? If the decedent left a Will appointing an executor,
the executor is the individual who administers the estate and files the complaint in
the Wrongful Death action. If the decedent died without a Will, the question of who
has a right to be appointed as administrator when the individual dies without a Will is
determined by statute. In New Jersey, the surviving spouse or domestic partner has
the first right. Children of the decedent are next. However, any heir may be appointed
assuming they obtain the appropriate renunciations from any other heir who has an equal
or prior right to be appointed. Similarly, in Pennsylvania the spouse has the first right
to act as administrator. If the decedent’s spouse refused to act, then his or her children
would have the right.

2. Who Shares in the Survival Claim? If the decedent leaves a Will, the Survival Claim
becomes a part of the estate and is distributed in accordance with the terms of the Will.
If the decedent does not leave a Will, then the estate is distributed in accordance with
the intestacy statute for the state in which decedent was domiciled at the time of death.
Intestacy statutes vary considerably from state to state. For example, in New Jersey if
the decedent leaves a spouse and parents but not children, the spouse gets the first 25%
(but not less than $50,000 or more than $200,000) plus three-fourths of the balance.
The parents receive the remaining balance. In Pennsylvania, if the decedent leaves a
surviving spouse and parents but no children, the spouse receives $30,000 plus one-half
of the remaining estate, and the parents receive the balance. The amount each intestate
share depends on the surviving family members. Generally, the categories are: spouse
and parent but not children; spouse and children (all of whom are also children of the
surviving spouse); spouse and children (some of whom are not children of the surviving
spouse); spouse and stepchildren (children of spouse who are not the decedent’s
children); children of spouse (stepchildren) but no descendants, parents, descendants of
parents, or descendants of grandparents. The amount to which each category is entitled
varies from state to state.

3. Tax. Death taxes are also a consideration in a Wrongful Death case. Funds allocated to
the Wrongful Death claim are not subject to death taxes. Funds allocated to the Survival
Claim are subject to estate taxes.

•Federal Estate Tax. There is a federal estate tax exemption in 2013 of
$5,250,000. The tax rate on the excess is 40%.

•State Estate Tax. Pennsylvania does not have an estate tax. New Jersey does
have an estate tax on all amounts over $675,000. The tax rate is graduated
beginning at 4.8% and increasing to 16% on amounts in excess of $10,040,000.

•Inheritance Tax. Both New Jersey and Pennsylvania have inheritance taxes.
In New Jersey there is no inheritance tax for amounts left to spouses or lineal
ascendants or descendants. The tax on other beneficiaries depends on the
relationship between the decedent and the beneficiary. Rates fluctuate between
11% and 16%. In Pennsylvania, there is no inheritance tax for amounts inherited
by surviving spouses, but there is a 4.5% inheritance tax on direct descendants
and lineal heirs. Tax on siblings and other heirs ranges from 12% to 15%.

4. The Process. While the administration of an estate can be complex, the steps are
relatively simple. In New Jersey the process is as follows:

• Probate Will or apply for Letters of Adminstration
• Inventory estate assets
• Obtain Date of Death valuations
• File state inheritance tax return, as required
• File final income tax return
• Distribute assets/retitle as necessary and fund applicable trusts

In Pennsylvania the process is as follows: 

• Probate Will or petition for appointment of Adminstration
• Publication of appointment/publication of death
• Inventory estate assets (including litigation proceeds)
• Notice to Interested Parties
• Obtain Date of Death values
• File PA inheritance tax return and inventory with Register of Wills
• NOTE: Return must be filed for every estate.
• File final income tax return
• Distribute assets/retitle as necessary/fund applicable trusts
• File status reports as required by Register of Wills

While the process seems simple, it is complicated by the fact that financial institutions
are slow to give date of death values, taxing authorities are very slow to audit tax returns,
creditors of the estate have time to file claims, and state attorney generals have time to
review estates involving charitable bequests.

Personal injury attorneys often ask this firm to step in and take over the administration of an
estate that has already been started and has gone awry. It is much better for the personal injury
firm to suggest that the appropriate family members retain the services of an experienced trust
and estate law firm that has a subpractice in personal injury consulting to assist in the probate
from the outset. Considerable time and money can be saved by doing things right from the
beginning.