Q: Can a wrongful death award arriving into sister's estate be divided in 3 (mother and 2 sisters)?
The estate I represent is winning a wrongful death award. My sister passed in an accident. Can the award be divided by the judge to benefit 3 people, (my mother, other sister and I) ? The interest of this would be that the award would not be taxable for anyone.
Thank you,
Claudia
A:
Claudia,
In general, awards for wrongful death are not taxable. However, if a portion is meant to compensate for pain and suffering or lost wages it can be taxable.
A: So sorry for your loss. Under New York's Estates Powers & Trust Law § 4-1.1, if your sister passed away without any children, the entirety of the recovery would go to your mother. Of course, you can certainly petition the court to divide the settlement proceeds equally among yourself, your other sister and your mother (provided your mother agrees to this arrangement). How you divide the settlement proceeds does not determine whether the proceeds are taxable. Generally speaking, wrongful death settlements are not taxable, https://www.irs.gov/pub/irs-wd/201702008.pdf
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