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Mar 19, 2008 12:00 PM
Estate Tax on Wrongful Death Claims?
Every state has a wrongful death act. Probate practitioners are probably familiar with their state’s version. Almost everywhere, though, the decedent’s personal representative must bring a wrongful death and survival action. And the general rule is that survival damages (for the decedent’s pain and suffering) go to the estate and are taxable.
But the wrongful death awards go to the next of kin for loss of society, consortium or support. These awards are not subject to estate tax. The executor or administrator represents the next of kin and brings the action on their behalf. In a wrongful death action, the personal representative is merely a nominal party, and because no resulting damages become estate assets, the estate is not a party to the action.
Last month, an Illinois appellate court rendered a decision that appears to depart from wrongful death legislation and case law nationwide. In Bender v. Eiring, 2008 WL 351126 (Ill. App. 1st Dist. Feb. 7, 2008), the wrongful death damages actually went to the estate.
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| GSTs | Family Offices |
| Private Foundations | Life Insurance |
| 2010 Tax Act News | Industry Trends Surveys |
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