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Federal Estate Tax Changes a Factor in Calculating Damages in Wrongful Death Cases

Beim v. Hulfish, A-5947-10
--- N.J. Super. --- (App. Div. 2012).

"This appeal arises in connection with the Wrongful Death Act, N.J.S.A. 2A:31-1 to -6.  The novel issue presented is whether an heir's loss of a prospective inheritance resulting from the imposition of increased estate taxes —— incurred due to the premature death of a decedent —— is recoverable in a
wrongful death action.  Because such a tangible, readily calculable diminishment in an heir's expectancy is in the nature of "pecuniary injuries resulting from such death," N.J.S.A. 2A:31-5, we conclude that it is an element of damages for the jury to consider in this case, subject to appropriate expert evidence.  We reverse and remand for further proceedings.

***

"In 2008, Mr. Kellogg's estate paid $1,196,083.57 in estate taxes.  Plaintiffs allege that had Mr. Kellogg survived until 2009 or later, his estate's tax obligation would have been reduced by $626,083 in 2009, and by the full amount of $1,196,083.57 in 2010.  See Economic Growth and Tax Relief Reconciliation Act of 2001 (the 2001 Act), Pub. L. No. 107-16, 115 Stat. 38, (codified as amended in scattered sections of 26 U.S.C.) (reducing estate taxes in 2009 and eliminating them entirely for 2010 only).  The 2001 Act was set to expire on December 31, 2010, returning the estate tax to its pre-2001 configuration pursuant to a built-in sunset provision.

"On December 17, 2010, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the 2010 Act), Pub. L. No. 111-312, §301, 124 Stat. 3296, (codified as amended in scattered sections of 26 U.S.C.) went into effect.  The 2010 Act extended the estate tax provisions of the 2001 Act through 2012.

"In the Law Division, plaintiffs sought to recover the difference in estate tax consequences between 2008 and a later year with reduced estate taxes (depending upon what year the jury determined was the appropriate date of death), as damages under the Wrongful Death Act.  Their theory was that Mr. Kellogg's heirs suffered a lost inheritance —— or at least the loss of a substantial portion of an inheritance —— by the early imposition of greater estate taxes, and that such loss is recoverable as "pecuniary injuries" under N.J.S.A. 2A:31-5 since it was the fault of defendants' tortious conduct."