Friday, November 30, 2012
Estate planning practitioners have long been focused on the estate tax cost of a premature death, but now litigators are considering it too. Recently, in Beim v. Hulfish, a New Jersey court allowed plaintiffs to assert additional estate tax cost as an additional measure of damages in a wrongful death claim.
John Kellogg was a 97 year old passenger killed in an auto accident in 2008, and his family brought a wrongful death action. In 2008, the estate tax exemption was $2 million and the Kellogg estate was required to pay almost $1.2 million in estate tax. If Mr. Kellogg had died in 2009, hi sestate would only pay half of that because the estate tax exemption was increased to $3.5 million. And if he had died in 2010, when the estate tax was increased to $5 million, his estate wouldn't have needed to pay anything.
Plaintiffs presented evidence of his life expectancy and left it up to the jury to determine which year Kellogg would have died in were it not for the car crash. Even though the court found that Kellogg could have died in any year prior to 2013, and the estate tax applicable in 2011 and 2012 was not determined until after the wrongful death action was filed, the Court ruled that the estate tax differential was not too speculative for the necessary standard to determine damages in a wrongful death action in New Jersey.
This case may only be applicable in New Jersey where the courts have a rather expansive view of the pecuniary liability under its wrongful death statute.
See Kathy Sherby and Stephanie Moll, Claim For Payment of Estate Taxes in Wrongful Death Case, Bryan Cave Life, Death and Taxes, Nov. 12, 2012.