Short Answer

In North Carolina, settlement money tied to a wrongful death claim is not part of the probate estate and is distributed to statutory heirs under the intestacy rules, not under the will. By contrast, money from a survival claim (the decedent’s personal injury or contract claim that existed before death) is an estate asset that follows the will after paying lawful expenses and claims. When a settlement covers both, it must be allocated between wrongful death and survival to decide how each portion is distributed.

Understanding the Problem

You want to know whether settlement funds from a claim your late spouse filed before death will pass under North Carolina’s wrongful death statutes or under the will through probate. You are the executor and the key decision is how to classify the settlement your spouse’s military JAG claim produced.

Apply the Law

North Carolina distinguishes two paths: (1) survival claims, which are the decedent’s own predeath claims that continue after death and are treated as estate assets; and (2) wrongful death claims, which compensate statutory beneficiaries for the death itself and are not estate assets. The personal representative (executor/administrator) is the only proper party to settle and distribute these claims. Court approval is generally required for wrongful death settlements unless all competent adult recipients consent in writing. The Clerk of Superior Court oversees accounting, and a judge approves wrongful death settlements when consent is lacking or minors are involved.

Key Requirements

• Identify the claim type(s): Confirm whether the settlement compensates for death-related losses (wrongful death) or predeath losses (survival), or both.
• Allocate the settlement: If both claims are resolved, allocate dollars between wrongful death and survival in the settlement documents; seek judicial approval if needed.
• Distribution rules: Wrongful death shares go to intestate heirs, regardless of the will; survival proceeds go into the estate, pay valid expenses/claims, then follow the will.
• Permitted deductions from wrongful death: Pay authorized attorney’s fees and limited last-illness and burial amounts as allowed by statute; certain governmental liens (e.g., Medicare) must be satisfied.
• Separate handling and accounting: Do not commingle wrongful death funds with estate assets; maintain a separate accounting and, in practice, a separate deposit account for those proceeds.
• Approval and forum: The personal representative brings the action; the Clerk of Superior Court supervises the estate; a district or superior court judge typically approves wrongful death settlements absent unanimous written consent of competent adult beneficiaries.

What the Statutes Say

• North Carolina Gen. Stat. § 28A-18-1 (Survival of actions) – Most tort and contract claims survive and become estate assets handled in probate.
• North Carolina Gen. Stat. § 28A-18-2 (Wrongful death) – Damages are not estate assets; pay limited last-illness/burial items and distribute to heirs under intestacy.
• North Carolina Gen. Stat. § 28A-13-3 (Powers of personal representative) – Authorizes compromise/settlement of wrongful death claims and outlines approval requirements.
• North Carolina Gen. Stat. § 28A-14-1 (Notice to creditors) – No creditor notice is required if the only asset is a wrongful death claim.

Analysis

Apply the Rule to the Facts: Your spouse filed a JAG claim before death. If the settlement pays for your spouse’s predeath losses (for example, pain and suffering before death or property damage), that portion is a survival recovery: it is an estate asset that pays valid expenses/claims and then follows the will’s gifts and residuary clause. If part of the settlement compensates for the death itself, that portion is wrongful death and must go to heirs under intestacy, not under the will. If the settlement covers both categories, it should be allocated, with court approval if required.

Process & Timing

1. Who files: The personal representative. Where: Estate is administered before the Clerk of Superior Court; settlement approval of wrongful death typically goes to a district or superior court judge (or proceeds by unanimous written consent of competent adult recipients). What: Document the allocation between survival and wrongful death; file a motion/petition to approve a wrongful death settlement if needed; maintain a separate accounting for wrongful death funds. When: Obtain approval and resolve liens before disbursing; do not commingle wrongful death proceeds with estate assets.
2. Resolve permitted deductions: reimburse estate costs of pursuing wrongful death, pay approved attorney’s fees, satisfy required medical/burial items within statutory limits, and address Medicare/Medicaid or State Health Plan recovery as applicable.
3. Distribute and account: Pay survival proceeds through the estate per the will after claims; distribute wrongful death proceeds to intestate heirs; file the required accountings (separate wrongful death accounting and the estate’s accounting) with the Clerk of Superior Court.

Exceptions & Pitfalls

• Mixed settlements require clear allocation; without it, distribution and lien handling can be disputed and may require court apportionment.
• Do not deposit wrongful death proceeds into the general estate account or list them as estate assets; keep a separate accounting to avoid commingling.
• Governmental liens (e.g., Medicare, Medicaid, State Health Plan) can override medical-expense caps; resolve them before distribution.
• If any recipient is a minor or incompetent, court approval and protective arrangements will be necessary for their share.
• A will cannot change who receives wrongful death proceeds; those funds follow the intestacy statute regardless of testamentary gifts.

Talk to a Probate Attorney

If you’re dealing with how to classify and distribute a settlement between survival and wrongful death in North Carolina, our firm has experienced attorneys who can help you understand your options and timelines. Call us today at [919-341-7055].

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.