Settlement of a wrongful death action can pose a challenge
for the decedent's attorney. Wrongful death actions are usually a two-step
process. First, the trial court handles the wrongful death action itself, and then
the Surrogate's Court, which administers the decedent's estate, must deal with
the allocation of the settlement among the decedent's beneficiaries and
distributees, as well as the approval of any legal fees. In a recent case Matter of Stokes, 2012 N.Y. Slip Op.
22144 (Sur. Ct. Queens County) [enhanced version available to lexis.com subscribers] the
court was particularly harsh to an attorney who submitted a facially and
procedurally deficient compromise order which failed to comply with NY EPTL 5-4.6.
The authority of a fiduciary to settle a wrongful death case
requires approval by the Surrogate's Court. As often happens in a wrongful
death action, the fiduciary of the decedent's estate applies for limited
letters under SCPA 702(1) seeking the authority to commence or defend a
personal injury or wrongful death action. SCPA 702(1) explicitly states that a
fiduciary which receives limited letters under that section is restrained from
settling the action or enforcing a judgment recovered until further order of
EPTL 5-4.6 addresses the application to the Surrogate's
Court to approve a compromise order. The Surrogate's Court can either approve
or disapprove the application, including the approval of attorney's fees and
other payable expenses (although approval by a trial court is conclusive
evidence of the adequacy of any compromise under EPTL 5-4.6(d)).
The Surrogate's Court is also in the best position to
determine the allocation of any settlement. Proceeds of the settlement related
to wrongful death are not included in the decedent's gross estate but proceeds
related to personal injury or pain and suffering are includable in the
decedent's gross estate. Distributees are entitled to wrongful death proceeds
in proportion to their pecuniary losses, but the beneficiaries of an estate are
entitled to the personal injury proceeds. The Surrogate's Court has a
particular understanding of these issues and has the ability to gain
jurisdiction over all interested parties including creditors and the taxing
Most importantly, as provided in EPTL 5-4.6(b), the
Surrogate's Court may need to appoint a guardian ad litem to represent the
interests of any minor children or those under a disability. In Stokes, a guardian ad litem was not
appointed prior to entry of the underlying Supreme Court order, and was not
even considered as a necessity by the decedent's attorney. In its admonishing
decision, the Queens County Surrogate's Court ordered the attorney for the
fiduciary in the wrongful death action to return all counsel fees previously
paid to the escrow account. The court then directed petitioner to amend her
petition and accounting to include all necessary parties and a request for
payment of the legal fees previously approved.
When dealing with compromise orders, an attorney should be
mindful of EPTL 5-4.6, as well as the limits of any powers granted to a
fiduciary under SCPA 702(1) in commencing a wrongful death action. The process
may seem tedious, but it must be followed to assure that the rights of all of
those involved are adequately protected.
Jennifer F. Hillman is an attorney at Ruskin, Moscou
Faltischek, P.C., Uniondale, New York where her practice focuses in the area of
trust and estate litigation. She can be reached at email@example.com
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Is a compromise order required for settling a personal injury claim that was already in process when the plaintiff passed away?