Wrongful Death - Tax Liability

In this clip, Brooklyn wrongful death lawyer Mr. Gary A. Zucker gives an overview of the tax liability on a wrongful death verdict.

MR. GARY ZUCKER: Wrongful death cases pose certain issues regarding income tax and estate taxes that an attorney needs to address in advising a client. There are two claims in New York in a death case. The first is for the decedent's own conscious pain and suffering, that is the pain and suffering that the deceased person had to endure while conscious as a result of the negligence or malpractice. Any money recovered under the pain and suffering claim goes through the decedent's estate, if the decedent had a will it goes through the decedent's will. If the decedent did not have a will, then it goes according to law to his next of kin. The other claim is the wrongful death claim. Now that is an individual claim belonging to each family member--the spouse, the children. And any money recovered pursuant to that claim goes directly to the spouse or the child and does not pass through the estate and is not subject to taxation. However, if the pain and suffering amount, after taking out the attorney's fees and expenses, exceeds in New York now $1 million, then it is subject to estate taxes and estate taxes can be very high. So we bring in specialists to help advise the client on how to minimize or avoid taxes on that award. All of these considerations need to be taken into account when finally resolving a death case.