[WSBAPT] Wrongful death and survival action
Roger Hawkes
Roger at law-hawks.com
Wed Nov 18 07:40:33 PST 2020
Andrekita: you don’t mention amounts at stake; that is always a practical consideration. Absent that info I advise you to get an opinion letter from a competent cpa. There are very few lawyers competent in the specific tax areas you have identified; and, yes, the allocation of settlement proceeds between potential recipients and characterization of those proceeds is very important and difficult to decipher. And sometimes you are better off getting a judicial opinion by motion.
From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Andrekita Silva
Sent: Tuesday, November 17, 2020 5:52 PM
To: Philip N. Jones <pjones at duffykekel.com>; WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Wrongful death and survival action
Law Office of
F.ANDREKITA SILVA
________________________________________________________________________
. November 17, 2020
Philip,
I have concerns about taxes to the estate of the decedent ( if IRS decides this is not decedent's pain and suffering but future lost earnings),
and potential income taxes to the beneficiaries say a distribution directly to them is for their own pain and suffering.
If this were you, would you try to figure out for what a jury may have awarded damages?
The defendants did not say what the settlement was for.
Is it reasonable to pay the net proceeds to the estate so that PR can distribute (to her and her brother)?
They have received separate advice (they have not disclosed from whom) that proceeds they receive are not taxable.
I'm not as confident as whoever advised them.
andrekita
Law Office of F. Andrekita Silva
1325 Fourth Avenue, Suite 2000
Seattle, Washington 98101
206-224-8288
www.seattle-silvalaw.com<http://www.seattle-silvalaw.com>
Quoting Andrekita Silva <ak at seattle-silvalaw.com<mailto:ak at seattle-silvalaw.com>>:
Law Office of
F.ANDREKITA SILVA
________________________________________________________________________
. November 17, 2020
Philip,
Thank you for your comments,
In our case, we initially sued under the survival statute because there were no beneficiaries that qualified under the wrongful death statute.
In late July 2019, the wrongful death statute was amended and gave the parents a right of action for wrongful death.
We never actually amended the pleadings because we eventually we settled and didn't need to.
However, we put all parties on notice that the parents were seeking damages pursuant to the wrongful death statute, and all defendants did extensive discovery on that issue.
So, it wasn't a last minute change. But, the settlement didn't say what the settlement was for - compensation to deceased for lost earnings, compensation to deceased for pain and suffering, compensation to beneficiaries for xyz etc.
Can I distribute net proceeds to the Estate ? For PR to distribute to beneficiaries?
andrekita
Law Office of F. Andrekita Silva
1325 Fourth Avenue, Suite 2000
Seattle, Washington 98101
206-224-8288
www.seattle-silvalaw.com<http://www.seattle-silvalaw.com>
Quoting "Philip N. Jones" <pjones at duffykekel.com<mailto:pjones at duffykekel.com>>:
I suggest that you go back to the original cause of action/complaint, and see what you were suing for. If it was a combination of wrongful death and survivorship (pain and suffering), then it will be difficult to now take the position that it is now 100% one or the other. The IRS is not very friendly towards people who change their tune in order to reduce the taxes.
On the tax side, are you referring to income taxes or estate taxes? You need to examine both and be certain of your conclusion. It is my recollection that survivorship proceeds are subject to estate tax, but wrongful death proceeds are not. But check for yourself. And look into the income taxes. My hunch is that no income taxes are owed, but check for yourself to make certain.
I express no opinion on your other questions. Find someone who does lots of wrongful death.
Phil Jones
Philip N. Jones
Duffy Kekel LLP
900 S.W. Fifth Ave. Suite 2500
Portland, OR 97204
pjones at duffykekel.com<mailto:pjones at duffykekel.com>
(503) 226-1371 – office
(503) 853-1482 – cell
(503) 226-3574 - fax
From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Andrekita Silva
Sent: Tuesday, November 17, 2020 4:25 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Testamentary Trust
Law Office of
F.ANDREKITA SILVA
________________________________________________________________________
. November 17, 2020
List serve,
I understand that the proceeds from a wrongful death action do not belong to the estate, rather to the beneficiaries (thank you to Eric Nelsen for a really great summary on this issue earlier this year). I also understand the proceeds from a survival action are more of a muddle. I know there are no taxes for pain and suffering experienced by the decedent for a physical injury.
I’d like to close the probate with a Declaration of Completion. Without the survival/ wrongful death action, the estate had extremely modest assets and we settled with all creditors. But, the Declaration of Completion must say all U.S. and Washington estate tax due as a result of Decedent's death have been determined, settled, and paid.
So, if we decide that settlement proceeds are for pain and suffering of the decedent, can I assume that this statement about taxes applies to only the Estate? This has nothing to do with any taxes that the beneficiary might owe in their own U.S. state or foreign country?
The proceeds from the survival/ wrongful death action are in my trust account. I would prefer to pay the net proceeds to the personal representative for HER to distribute to the beneficiaries (herself and her brother.) They are in agreement as to how much they will each receive. My main concern is to avoid liability for myself if there is a tax issue down the line. Is this okay to do?
andrekita
Law Office of F. Andrekita Silva
1325 Fourth Avenue, Suite 2000
Seattle, Washington 98101
206-224-8288
www.seattle-silvalaw.com<http://www.seattle-silvalaw.com>
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