2nd Sep 2016
When a person dies because of the illegal acts or negligence of a person or organization, a decedent’s estate has the right to file a personal injury suit and recover damages related to the incident that resulted in the decedent’s death.
Such a personal injury lawsuit can bring two causes of actions: wrongful death claims and survival actions. The distinction between wrongful death and survival actions is critically important for both a DC wrongful death attorney and the survivors of a decedent to understand.
Wrongful death damages are designed to compensate a decedent’s loved ones for the loss of support for the family caused by his or her death and, in some cases, the emotional trauma that the death inflicted on the family.
Economic loss is, relatively speaking, easy to quantify: it includes lost wages, medical expenses, funeral bills, and other costs.
A widow or widower may be eligible for damages based on loss of consortium, while the decedent’s children could be awarded damages for loss of guidance and nurture. Damages for other forms of emotional suffering are much harder to tally, but have become increasingly common in recent years.
In some cases, it is also possible for a decedent’s family to receive punitive damages for the wrongful death action. This form of damages is, as the name implies, designed to punish the wrongdoer and deter future misconduct.
Damages for wrongful death are designed to compensate the decedent’s family and, as such, flow to family members, not the decedent’s estate. The laws on how the damages from a wrongful death suit are distributed vary by state; in some states, even if the decedent has a will, wrongful death damages are distributed to survivors as if the decedent had died without a will.
Survival actions are considerably different. These arise from the claims that the decedent could make from the moment they were first injured by the defendant in their personal injury claim until the time they died. This would include pain and suffering and lost earnings.
Because damages obtained through a survival action belong to the decedent and not their family, these damages must go through the probate process.
This leads to the other major distinction between wrongful death and survival actions: taxes.
Wrongful death claims are tax-free to the family of the decedent. These damages do not pass through the probate system and instead are paid directly to the decedent’s family, so they are not subject to federal or state estate taxes. And, because the Internal Revenue Service classifies wrongful death claims as “compensation for physical injuries,” they are also tax free.
However, the same is not true for survival actions. Because these go through the probate system (after all, they are payable to the decedent, not his or her family), any damages received through a survival action are subject to estate tax.
In any case where the decedent died with a will, it is important to understand that the person who is responsible for filing a personal injury lawsuit — regardless of what claims are being pursued — is the personal representative or executor of the estate.
With the help of a skilled Charlottesville estate planning attorney, a personal representative can navigate this legal minefield, file the appropriate claims, and attempt to recover damages. Experienced attorneys have the tools to help guide the personal representative through the tax consequences of any damages that result from the personal injury suit.
Thanks to our friends and co-contributors at Cohen & Cohen, P.C. for their added insight into wrongful death practice.