New York Estate Planning & Elder Law Blog
PROBATE IS UNAVOIDABLE
It is a fact of life that we can never plan for the worse case scenario and there is always risk in anything you do. The law recognizes this special risk, at least in part, in wrongful death lawsuits. In order for a wrongful death action to proceed, a party must apply to the Surrogate’s Court to act as the personal representative of the estate. In essence, that person must stand in the shoes of the deceased for purposes of the wrongful death action. Any and all settlement or award monies must pass through the probated estate under the jurisdiction of the Surrogate’s Court. This can present special issues if you already have a will, but no trust or other legal device to bypass the probate process and your estate is close to the estate tax exemption threshold. The federal estate tax exemption is currently set at $5.45 million dollars.
Anything above the Federal exemption is taxed at a heavy 40 percent. New York’s estate tax exemptions are changing and will continue to change until 2019 when it will match the Federal government’s exemption amounts. After 2019 there is an added problem with New York’s estate tax exemption; specifically, if the entirety of the estate exceeds the exemption amount by five percent, the entirety of the exemption is forfeited and the entire estate is taxed. That means that if your estate is say, for example, 120 percent of the exemption amount, the entirety of your estate will be taxed under New York rates. At the same time, 20 percent of your estate will be taxed at 40 percent. It is important to note the difference between the exemption amount and the taxable rate.
While New York’s exemption amounts are the same as the federal government, the taxable rate is not. New York taxes estates on a sliding scale, with taxable rates from three percent to 16 percent. As noted, if your estate is already close to the federal exemption or the current state exemption amounts, which, as noted are in flux until 2019, and you add a wrongful death settlement to your probated estate, you insure heavier taxation of your estate than you planned.
ELEMENTS OF WRONGFUL DEATH
A wrongful death action requires proof of four elements.
- First, death of a person;
- second, that death was caused by the wrongful acts of another;
- third, the deceased would have been able to maintain a cause of action but for his/her untimely passing; and
- fourth, the survivors of the deceased suffered economic loss due to the deceased untimely passing.
The damages in the action allow for the estate of the deceased to recover the value of any medical expenses incurred, costs for the funeral, pain and suffering that the deceased consciously felt prior to passing away, attributable to the wrongful acts of the Defendant(s) and, most importantly, lost support and services provided by the deceased to the survivors. It is also important to note that the Surrogate’s Court may deny any settlement, depending on the specific nature of the case.