PENNSYLVANIA WRONGFUL DEATH CLAIM BASED ON THE DEATH OF A NEW JERSEY RESIDENT
by: Begley Admin
by Thomas D. Begley, Jr., Esquire, CELA
Questions frequently arise in cases involving wrongful death where the injury and cause of action occurred in Pennsylvania (“PA”) resulting in the death of a New Jersey (“NJ”) resident. The underlying issue is often which state law applies. The answer is that both states’ laws apply to different parts of the case. The underlying litigation is brought in the PA courts. In wrongful death cases there are two components: (1) the wrongful death claim, and (2) the survival claim. This article will address many of the issues that arise.
Wrongful Death Claim
For the wrongful death portion of the claim, the PA statute controls (42 Pa. Code §8301). This statute authorizes the spouse, children, parents, or personal representative of the estate of the decedent to bring the action. If the personal representative of the estate brings the action, they are appointed by the Surrogate Court in NJ pursuant to NJ law. With respect to the issue of who are the claimants, PA law controls, and that law specifies that the beneficiaries of the action are the spouse, children, or parents of the deceased. This is true whether or not the decedent left a Will. Damages in the wrongful death component are then distributed pursuant to the PA intestacy statute, not the NJ statute. It is important to understand the differences between the NJ and PA intestacy statutes, particularly with regard to how children of the decedent benefit. Court approval of the settlement is required if a claimant is a minor or incapacitated person. In cases involving minors or incapacitated claimants, a Settlement Protection Trust is recommended. If such a trust is not utilized, any settlement for such individuals will be subject to control by a guardian or will be placed in an account controlled by the Surrogate’s office.
The wrongful death portion of the claim is subject to neither federal nor state estate tax, nor to the NJ or PA inheritance tax. Creditors of the decedent cannot assert any claims against the wrongful death portion of the settlement; however creditors of the claimants may assert claims against the recovery once it is distributed to them.
Both PA and NJ law control the survival claim. The PA Survival Act (42 Pa. Code §8302) allows the suit to be brought, however, the NJ statute controls who benefits. The action for the survival claim is brought on behalf of the estate by the executor or administrator who is appointed by the Surrogate of the county in which the decedent resided. If the decedent died with a will, the estate is represented by an executor and if the decedent died without a will, the estate is represented by an administrator. Where there is no will, NJ state law determines who has priority standing to be appointed as the administrator of the estate. The claimant for the survival portion is the estate itself. Where there is no will and an administrator is appointed to represent the estate, it is important to ensure that they are granted sufficient authority by the surrogate’s court to represent the estate with respect to a survival action and sufficient authority to approve any settlement.
Damages allocated to and received under the survival claim are then distributed in accordance with the Will of the decedent, or absent a Will, they are distributed in accordance with the NJ intestacy statute. In cases involving a minor or incapacitated beneficiary, a Settlement Protection Trust is often recommended to allow for more flexibility in managing significant estate distributions.
Estate and inheritance taxes must be considered with respect to the survival portion of the claim because it passes through the estate. Federal estate tax may apply if the survival claim exceeds the federal estate tax exemption for the year of death of the decedent. The amount of the federal estate tax exemption has increased annually from $1,500,000 in 2004-2005 and gradually over the years. Recently the exemption was $5,490,000 in 2017, $11,180,000 in 2018, $11,400,000 in 2019, $11,580,000 in 2020, $11,700,000 in 2021, and $12,060,000 in 2022. Beginning on January 1, 2011 estates of decedents survived by a spouse may pass any unused exemption to the surviving spouse. Since the decedent was a resident of NJ, the NJ estate tax would control, not the PA estate tax. On or before December 31, 2016, the NJ estate tax exemption was $675,000. On or after January 1, 2017 but before January 1, 2018, the exemption was $2,000,000, and for decedents dying on or after January 1, 2018 the tax was repealed. The NJ inheritance tax also would apply rather than the PA inheritance tax, because the decedent was a resident of NJ. The NJ inheritance tax applies to all beneficiaries except for a spouse or lineal ascendants or descendants of the decedent. Exemptions and rate of tax depend on the relationship of the beneficiary to the decedent. This tax applies regardless of the year of death.
Claims of the decedent’s creditors are enforceable against the estate, thus survival act proceeds passing through the estate are subject to those creditors’ claims. Another issue which may complicate the administration of the estate is the necessity for bond. If the decedent had a will, the will may have waived bond for the executor. However, if the will is silent as to any bond, of if there is no will and an administrator is appointed, a bond will be required when any significant recovery passes through the estate. In many instances an administrator is not bondable to the extent needed to handle a significant recovery. In such a situation, a petition for direction may be filed so that an attorney can be appointed as administrator or co-administrator of the estate, alternatively, the personal injury attorney may be directed to have the recovery paid into the attorney trust account to avoid an administrator’s bond.
Issues to be considered in allocating between a wrongful death and survival claim include death taxes, income taxes, claims of creditors and bonding for an administrator. For example, where there are different beneficiaries under the wrongful death act versus the survival act, due to the difference in each state’s intestacy statute, counsel may wish to take that into account when making requests for allocation. Similarly, where there are significant estate creditors or where the administrator may have difficulty getting bonded, allocation between the two actions can have significant consequences.