The Wrongful Death Act spells out the proper priority of payment of all case proceeds as follows:
- First, any expenses advanced by the estate for costs associated with prosecution of the wrongful death case are paid back to the estate.
- Second, attorney’s fees are paid from the settlement or verdict.
- Third, burial expenses of the deceased are paid, and reasonable hospital and medical expenses not exceeding $4500 incident to the injury resulting in death are paid, except that the amount applied for hospital and medical expenses shall not exceed 50% of the amount of damages recovered after deducting attorney’s fees.
- Fourth, the full remaining balance is then distributed to surviving family according to the Intestate Succession Act as if the decedent died without a will, even if in fact he or she did have a will.
Unlike other bank accounts or assets owned by the decedent at the time of death, the wrongful death case proceeds do not become part of the “estate assets”. Attorneys who handle these claims describe the approach by stating that wrongful death proceeds are paid “outside of the estate”. This is very beneficial because a large award would not be reduced even if the decedent died with large debts or outside financial obligations. Simply put, the surviving family members keep the wrongful death proceeds and they do not have to pay any estate debts or taxes, except for the burial and hospital expenses mentioned.
Wrongful death claims are subject to health insurance lien claims, including claims asserted by publicly funded health insurance such as Medicaid and Medicare. Because the laws pertaining to government claims against wrongful death proceeds are constantly evolving, you should secure an up-to-date legal opinion on the validity and value of outside claims at the time of settlement or trial. Health insurance reimbursement claims can be discounted and, through aggressive negotiations, considerable money can be saved for the benefit of surviving family members.