Every state has a wrongful death act. Probate practitioners are probably familiar with their state’s version. Almost everywhere, though, the decedent’s personal representative must bring a wrongful death and survival action. And the general rule is that survival damages (for the decedent’s pain and suffering) go to the estate and are taxable.
But the wrongful death awards go to the next of kin for loss of society, consortium or support. These awards are not subject to estate tax. The executor or administrator represents the next of kin and brings the action on their behalf. In a wrongful death action, the personal representative is merely a nominal party, and because no resulting damages become estate assets, the estate is not a party to the action.
Last month, an Illinois appellate court rendered a decision that appears to depart from wrongful death legislation and case law nationwide. In Bender v. Eiring, 2008 WL 351126 (Ill. App. 1st Dist. Feb. 7, 2008), the wrongful death damages actually went to the estate.
This potentially dangerous precedent was set in the sad case of a young girl named Lawana Barton. In 1991, the Illinois Department of Children and Family Services (DCFS) obtained custody of Lawana, then age 14, to protect her from her mother’s neglect. In 1992, the juvenile court found that, because Lawana’s biological parents were unable to care for her, she should remain under DCFS custody.
Five years later, Lawana was 20 years old and still in foster care. The decision doesn’t explain why the young woman was in foster care past age 18. But it does report that while in foster care, Lawana suffered a seizure and died.
Illinois’ Probate Act has a provision for disinheriting neglectful parents when a child dies. After Lawana had died and probate proceedings began, the public guardian filed a petition for adjudication of parental neglect. The claim was that Lawana’s biological parents willfully failed to provide for her care and support; the public guardian sought to negate any interest the parents might have had in Lawana’s estate. The parents signed the necessary disclaimers and the probate court entered an order stating that Lawana’s parents would be treated as if they’d both predeceased Lawana.
Unfortunately, that court order was not the end of the story.
On May 22, 1999, the special administrator of Lawana’s estate filed a complaint seeking damages under Illinois’ Wrongful Death Act and Survival Act. The complaint alleged that Lawana’s seizure and death were the result of negligence by her foster mother, an Illinois foster care organization, and various medical personnel who’d treated the young woman. The complaint also alleged that the negligence caused some of Lawana’s next of kin to sustain pecuniary losses, including losses of society, services and companionship.
The trial court entered partial summary judgment in favor of the defendants regarding Lawana’s parents’ claims for loss of society but barred their recovery under the Wrongful Death Act. In its ruling, the court relied upon the disclaimers Lawana’s parents had signed as well as the probate court order deeming them to have predeceased Lawana with respect to her estate’s assets.
The special administrator filed an affidavit from Lawana’s biological father stating that he had been blind since 1991 and that when he signed the disclaimer, he’d understood only that he was giving up rights to his daughter’s possessions—not that he also was giving up his right to personal losses or damages suffered if she should die.
The affidavit did not sway the trial court. The special administrator appealed the trial court’s summary judgment ruling.
On appeal, the special administrator contended that the wrongful death action for loss of society was not an asset of Lawana’s estate—so her parents’ disclaimers did not bar their claims for loss-of-society damages. The defendants argued that the wrongful death action should be considered an estate asset, which would bar the parents’ claims.
Enter the appellate court's misguided opinion.
The appellate court noted that the Wrongful Death Act allows only a decedent’s personal representative to file an action and that any amounts recovered are for the exclusive benefit of the decedent’s spouse and next of kin. The court also said that the act’s language and legislative history clearly indicate the legislature’s intent that a cause of action for loss of society damages is an asset of the decedent’s estate. Moreover, the court said that any monies recovered as a result of a wrongful death action must pass directly to the estate.
Accordingly, the court held that the wrongful death action, including the parents’ loss-of-society claims, is an asset of Lawana’s estate. It found that the parents were barred from recovering the loss-of-society damages because they’d signed disclaimers renouncing any interest in the decedent’s estate and the court had issued an order deeming them to have predeceased her. To boot, the court found no ambiguity in the disclaimers and no merit in the father’s claim that he hadn’t understand the disclaimer.
This may be a case of bad facts making bad law. By accepting the low-hanging fruit of the narrow disclaimers rather than pushing for a full finding of parental neglect that under Illinois law would have resulted in the parents’ disinheritance, the public guardian left open the possibility that the parents could collect some other benefits, such as life insurance proceeds or the wrongful death award. Then the appellate court managed to prevent parents who’d failed to raise a daughter from profiting by her death. But the court did so by getting the Wrongful Death Act wrong.
We not only think the appellate court made a mistake, but also worry that the decision could have an unfortunate ripple effect. Will wrongful death proceeds now be subject to estate tax? Spousal elections? Creditors' claims? As we all wait to find out, just remember to be careful what your clients disclaim.