PROBATE ISSUES IN NEW JERSEY WRONGFUL DEATH CASES
by: Begley Law Group
by Thomas D. Begley, Jr., Esquire, CELA
Wrongful death cases involve a number of complex probate issues.
The first question is, “Who is the Plaintiff?” If there is a Will, the Plaintiff is the Executor. If there is no Will the Plaintiff could be the Administrator of the estate, if one has been appointed or if not an Administrator ad Prosequendum. The claim is generally divided into two components. The first claim is a survival claim. The survival claim is brought on behalf of the estate of the decedent. Any recovery is paid to the Executor if there is a Will, or the Administrator of the estate if there is no Will. Payment cannot be made to an Administrator ad Pros. Independent of the estate, children, parents and spouses may have a claim for services, companionship, care, advice and counsel. However, no award may be made for emotional distress. With respect to the wrongful death component, if there are no dependents the claim is paid to the spouse and descendants equally pursuant to the Intestacy statute. If there are dependents, then that component is divided by court order. If there is a Will and an Executor is being appointed, the Will generally will state that the Executor is not required to post a bond. However, in deciding who should be appointed Administrator consideration must be given to whether or not the individual proposed to be Administrator is bondable. Letters of Administration/Testamentary must be obtained. An Employer Identification Number (EIN) must be obtained for the estate. An inventory must be filed with the Surrogate’s Office. Short Certificates must be obtained. An estate account should be opened by the Executor or Administrator. Publications must be placed in the appropriate newspapers. If a potential claimant is a minor or incapacitated, a Guardianship may be required.
The next issue is who can sign the Release. If there is a Will, the Release is signed by the Executor, if not the Release must be signed by the Administrator of the estate. An Administrator ad Pros is not authorized to sign a Release. The problem can be a bond. If there is a Will, the terms of the Will usually provide that no bond is required of the Executor. If there is no Will, a bond will be required for the Administrator of the estate. A frequent bone of contention is how the survival claim will be distributed. If there is a Will, the recovery of the survival claim is a part of the estate and is distributed in accordance with the terms of the Will. If there is no Will, the survival claim is distributed in accordance with the terms of the New Jersey Intestacy Act.
Creditors of the decedent have a claim against the survival claim component but have no claim against the wrongful death component.
Payment of Wrongful Death Claim
If there is are no dependents, the wrongful death component is divided among the spouse and descendants equally. If there are no spouse or descendants, then the claim is divided in accordance with the New Jersey Intestacy statute. Under the New Jersey Intestacy statute, if there is a surviving spouse and parent(s), but no children, the spouse receives the first 25% (but not less than $50,000 or more than $200,000) plus 75% of the balance, and the parents receive 25% of the balance. If there are a spouse and children of the decedent, all of whom are also children of the spouse (and the spouse has no children by any other relationship), the spouse receives 100%. If there is a spouse and no children or surviving parents of the decedent, the spouse receives 100%. If there is a spouse and children of the decedent (some of whom are not children of the spouse), the spouse receives the first 25% (but not less than $50,000 or more than $200,000) plus 50% of the balance, and the children of the decedent receive the remaining 50% of the balance. If there is a spouse and stepchildren (children of the spouse who are not the decedent’s children), the spouse receives 100% of the estate. If there is no spouse or domestic partner, the descendants inherit by representation.
If there are dependents, then the claim is divided by court order. Factors in a court order allocating the wrongful death claim include age, physical and mental condition, educational requirements, financial condition and other means of support. If the decision is made by a jury, it is based on what the jury deems to be fair.
Estate and Inheritance Taxes
The federal estate tax exemption for 2022 is $12,060,000. If the total estate, including the recovery is less than this amount, there is no federal estate tax due. If the total net estate exceeds this amount, the tax rate is 40%. The New Jersey estate tax has been repealed with respect to spouses and lineal ascendants and descendants, but the New Jersey inheritance tax still applies for other beneficiaries. However, federal estate and New Jersey inheritance taxes do not apply to the wrongful death component of the claim.
In cases involving the New Jersey inheritance tax, the allocation will have to be reviewed by the New Jersey Division of Taxation.
Care should be paid to allocating recoveries between the survival component and the wrongful death component. It is often beneficial to allocate more money to the wrongful death component and less to the survival component, if the idea is to avoid creditors of the estate and minimize federal estate and New Jersey inheritance taxes. It should be remembered that while creditors of the estate have no claim against the wrongful death component, creditors of the individuals receiving monies from the wrongful death component do have claims against those funds.