SETTLEMENT ALLOCATION IN NEW JERSEY WRONGFUL DEATH CASES
by: Begley Law Group
by Thomas D. Begley, Jr., Esquire, CELA
When a defendant causes the death of another individual by a wrongful act or negligence, that person shall be liable for damages. There are two components of the claim. One is a Survival Claim, and the other is the Wrongful Death Claim. The Survival Claim is brought by the estate, either by the executor under a will or the administrator, if the decedent died intestate. For monies received under the Survival Claim, there is usually some confusion about who is entitled to the damages payable to the estate. Generally, the monies are paid to the individuals who would inherit under the New Jersey Intestate statute. This means that the surviving spouse would take 100%. However, there is an exception, if the decedent is survived by a surviving spouse and one or more surviving descendants. In this case, they are entitled to equal proportions for purposes of recovery, notwithstanding the New Jersey Intestacy statute. So, if they are a family with a surviving spouse and three children, each claimant would take 25%.
Under the Wrongful Death Claim, the court allocates damages in such a way to result in a fair and equitable apportionment among claimants, taking into account the age of the dependents, their physical and mental condition, the necessity or desirability of providing them with educational facilities, their financial condition, and the availability to them of other means of support, present and future, and any other relevant factors that will contribute to a fair and equitable portion of the amount recovered.
A major issue is how much should be allocated to the Survival Claim and how much to the Wrongful Death Claim. In many cases, one consideration is New Jersey estate tax and, in some cases, federal estate tax is an issue. Occasionally, New Jersey inheritance tax must also be considered. If the Survival Claim exceeds $5,490,000 in 2017, it is subject to federal estate tax. If the Survival Claim exceeds $2,000,000 in 2017, it is subject to New Jersey estate tax. If the beneficiaries of the estate are not blood relatives of the decedent, there will be New Jersey inheritance tax. Monies allocated to the Wrongful Death Claim are not subject to federal or state estate taxes or inheritance taxes. Neither the Survival Claim nor the Wrongful Death Claim are subject to federal or state income taxes.
The second issue is Medicare, Medicaid, ERISA and other liens. Liens would attach to the Survival Claim, but not to the Wrongful Death Claim.