The Effects of Wrongful Death and Survival Actions on a Decedent’s Estate
When an individual passes away due to the negligence of another, the personal representative of the decedent’s estate may consider filing a personal injury lawsuit to recover damages. The personal injury lawsuit usually includes two related but unique causes of action: wrongful death action and survival action. The Pennsylvania Wrongful Death Act, 42 Pa. C.S. § 8301 et seq., describes the distinction between wrongful death and survival actions. The personal representative for a decedent’s estate must understand the distinctions between these two separate causes of action and how each will impact the administration of the decedent’s estate.
According to Section 8301 of the Pennsylvania Wrongful Death Act, the wrongful death action seeks to compensate a decedent’s loved ones for the death of the decedent when that death was caused by the negligence, unlawful violence, neglect, or wrongful act of another. Traditionally, wrongful death actions sought to compensate the decedent’s family for the economic loss caused by the decedent’s death, usually by awarding damages for the income the decedent would have earned had he or she lived. These damages include the reasonable hospital, nursing, medical, funeral expenses and expenses of administration necessitated by reason of the injuries causing death, as well as the funds the decedent would have contributed to his or her family and the monetary value of the services, society and comfort the decedent would have provided to his or her family had the decedent lived. However, under the Pennsylvania Superior Court’s holding in Rettger v. UPMC, 991 A.2d 915 (Pa. Super. 2010), wrongful death actions can compensate the decedent’s loved ones for the emotional and psychological loss that accompanies the decedent’s death, which is extremely difficult to quantify.
The potential beneficiaries of a wrongful death award are limited to the spouse, children, and/or parents of the decedent. Under Section 8301(b) of the Wrongful Death Act, the beneficiaries’ shares of the wrongful death award are determined by the intestacy laws of Pennsylvania, which determine how an individual’s estate passes if he or she dies without a will. The wrongful death portion will pass according to intestacy laws even if the decedent did execute a will prior to his or her death.
The wrongful death award is the compensation the decedent’s family is entitled to receive as a result of their loss, and is therefore distributed directly to the beneficiaries, not to the decedent’s estate. Since these funds are the property of the beneficiaries, not the decedent’s estate, wrongful death proceeds are not subject to the Pennsylvania inheritance tax or the federal estate tax and cannot be used to repay the creditors of the decedent’s estate. Wrongful death proceeds are not considered income to the beneficiaries, and as such will pass directly to the beneficiaries without being subject to income tax. As the wrongful death proceeds pass directly to the beneficiaries, these assets are also not subject to the probate process.
In contrast, Section 8302 of the Wrongful Death Act defines survival actions as the causes of action that the decedent would have been able to bring for the injuries he or she suffered had the decedent survived. Since the decedent is unfortunately not able to personally recover from this lawsuit, the decedent’s estate is the beneficiary of any proceeds recovered for the survival actions. The survival action proceeds are distributed to the decedent’s heirs as identified in his or her will or per the laws of intestacy (if the decedent died without a will).
The survival action proceeds will be distributed to the estate’s personal representative to be held, administered through the probate process, and distributed with the decedent’s estate. The survival action proceeds are subject to the Pennsylvania inheritance tax and the federal estate tax, and can be used to satisfy the claims of any estate creditors. The survival action proceeds must also be included on the Inventory filed with the Register of Wills. If the survival action award is received after the filing of the estate’s Inheritance Tax Return (REV-1500) and Inventory, the personal representative must file a Supplemental REV-1500 and Supplemental Inventory within thirty (30) days of the award. Once all taxes and creditors have been paid, the personal representative will distribute the survival action proceeds according to the terms of the decedent’s will or the laws of intestacy.
In a lawsuit that involves both wrongful death and survival actions, the Court will allocate the total damages awarded among the wrongful death action and the survival action, and the proceeds will be distributed accordingly. It is important for an estate’s personal representative to understand the differences between wrongful death and survival actions because each may be distributed to different beneficiaries, and each has different tax implications as well as procedures for distribution. To illustrate the difference between wrongful death and survival actions, consider the following example. An individual, X, is married with two adult children. She has executed a will that leaves her entire estate to her husband. X undergoes surgery, complications occur during the surgery, and X dies in the hospital two days after her surgery. The personal representative brings a lawsuit for negligence, which includes both wrongful death and survival actions, against the hospital and doctors that treated X. The case settles for $1 million, with the Court allocating 50% of the award to the wrongful death cause of action and the remaining 50% to the survival action.
In the above example, the 50% allocated to the wrongful death action will be distributed directly to X’s intestate heirs to compensate them for the loss of support and services, as well as their own emotional and psychological harm, suffered as a result of X’s death. Under the intestacy laws of Pennsylvania, X’s husband is entitled to receive the first $30,000 of this award plus one-half of the remaining balance. The other one-half of the remaining balance will be distributed equally among X’s two adult children. These funds will pass directly to X’s husband and children, who will not have to pay any taxes on the receipt of these funds. In contrast, the 50% allocated to the survival action will be distributed to X’s estate to compensate X (represented by her estate) for the harm she suffered as a result of the complications of her surgery. The personal representative for X’s estate will be able to use these funds to satisfy any creditors of X’s estate and will need to pay any Pennsylvania inheritance tax or federal estate tax for these assets. Following the payment of X’s creditors, the payment of any taxes, and the conclusion of the probate process, the personal representative for X’s estate will distribute the remaining survival action proceeds to X’s husband, per the terms of her will.