Morley v Div of Taxation

Morley v. Dir., Div. of Taxation Net Proceeds Recovered on Survival Claim Were Includable in Value of Estate for Estate Tax Purposes Source NJJL June 21, 2021 at 12:00 AM The parties cross-moved for summary judgment in the action filed by plaintiff to challenge the imposition of estate tax on the award obtained in a survival action brought by plaintiff on behalf of decedent's estate. Decedent died in an explosion caused when utility workers performing maintenance on underground electrical lines in front of decedent's home accidentally struck as gas line. Specifically, plaintiff sought to challenge the division's valuation of the award to be included in the estate for taxation purposes. Under the estate tax statute, the amount taxable to the estate was equivalent to the value of the asset as of the date of the decedent's death. Plaintiff argued that the amount of the survival claim should be equal to the value of the claim on the day of decedent's passing. Plaintiff presented an expert valuation report that opined that the value of the survival claim on the date of decedent's death was $2,690,600. However, the division argued that the amount includable for estate tax purposes was the total net proceeds recovered by the estate. Plaintiff had settled decedent's survival claim for a net recovery of over $6.7 million. In support of its argument, the division cited inheritance tax regulations, which required any sums recovered under the New Jersey Death Act to be included in the value of a decedent's estate. The court agreed with the division's arguments and granted summary judgment in its favor. The court ruled that both the estate tax statute and the transfer inheritance tax statute should be read in pari materia because both statutes concerned the same subject matter -- namely, the taxable value of a decedent's estate. The court agreed with the division that the transfer inheritance tax statute defined the date of death value of a survival claim as the amount recovered by the estate in the survival claim. The court therefore ruled that the net proceeds recovered by plaintiff in settlement of decedent's survival claim should be included in the value of decedent's estate for estate tax purposes.