I am an administrator of my mother’s Delaware County estate. She died 4 years ago in a car accident without a Will, unmarried and survived by my nephew and myself. My brother died before my mother, and my brother had one son, my nephew. I opened up her estate with the Register of Wills in Delaware County. Later, I hired a lawyer to bring a wrongful death lawsuit against the man who ran into my mother. That lawsuit is about to be settled, and my attorney is asking me to approve that settlement. The funds are to be divided 90% Wrongful Death and 10% Survival Action. Is this fair to my nephew, and as administrator, do I have a duty to pursue a different mix?
This is an issue you should certainly be concerned about. As the Estate Administrator you have a fiduciary duty, the highest duty under the law, and could be personally liable for any financial miscues. Let’s examine the difference between a wrongful death and survival action to help point you toward the right questions and course of action.
Wrongful Death claims are meant to compensate the deceased’s loved ones for their loss caused by the defendant’s negligent or intentional killing. These proceeds pass outside of the estate and are not subject to inheritance tax in Pennsylvania. Allocating a larger percentage to Wrongful Death can be sound tax planning. Finally, the distribution of Wrongful Death proceeds is under a scheme similar to the Pennsylvania intestacy statute.
Intestacy statutes are the government’s response on how to distribute a person’s estate that died without a Will. These statutes typically distribute the estate in equal shares closest relatives of the deceased.In most cases this ends up being the surviving spouse and children. Here, your mother died a widow;in Pennsylvania this means her children should share the estate in equal shares. However, the wrongful death intestacy formula has a caveat. Unlike the regular wrongful death statute, it does matterthat your brother predeceased your mother. His share would not automatically pass to his children. Instead, his share would only pass if a judge decides your nephew should be compensated based on his degree of relationship with your mother.
Remember, Wrongful Death is meant to compensate loved ones for their loss which would be impossible for your brother in this scenario. However, his share can pass directly to his son (your nephew) if he had a relationship with his grandmother and deserves to be compensated for his loss. So, before approving any settlement, you should attempt to get in front of a judge to have a determination made on the relationship issue. Otherwise, your nephew could be left out of the 90%, all to your benefit. That may lead to a claim of bias and breach of duty, and personal liability for you.
On the other hand, Survival Actions in Delaware County are meant to “compensate” the deceased. The personal representative brings a survival action on behalf of the deceased, as if the deceased had survived to bring the claim themself. This money does pass through the deceased’s estate and is subject to inheritance tax. Again, your mother died without a will so this money passes through her estate, to be divided under the regular Pennsylvania intestacy statutes. Without the caveat as above, your brother’s share passes in full to your nephew, and he would receive an equal ½ of the 10% (or 5% of the total estate).
One way to avoid this uncertainty is to enter into a family settlement agreement regarding the distribution of these funds. That way, you can come to terms with your nephew’s guardian based on what is fair to him in this situation and avoid the uncertainty of the intestacy statutes.If this is the path you decide on, it is crucial to get this agreement in writing and signed by all parties.
Ultimately, your nephew could receive ½ of the estate, or 5% based on the outcome of the relationship he had with your mother. It is critical to your duty as administrator to determine the answer to this question before accepting any settlement agreement. The impact of that decision cannot be overstated. You must be careful here!
If you need assistance with probate or Delaware County Estate Litigation, please call one of our Delaware County Probate or Delaware County Estate Planning Attorneys for a free consultation. We have Estate Planning Attorneys in New Jersey, Pennsylvania, New York, Minnesota and Florida.
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