FAQ: How Do I Distribute Wrongful Death Proceeds to Rightful Heirs in North Carolina?
Detailed Answer
Under North Carolina law, money recovered in a wrongful death case is governed by N.C.G.S. § 28A-18-2. Even though the personal representative (PR) of the estate controls the lawsuit, the proceeds bypass the normal probate estate and are distributed directly to the statutory beneficiaries. Creditors of the decedent generally cannot reach these funds.
1. Open an Estate and Appoint a Personal Representative
A wrongful death action may be brought only by the PR—an administrator (no will) or executor (with a will). If no estate is open, one must be started in the clerk of court’s office in the county where the decedent lived. Once appointed, the PR has legal standing to settle or litigate the claim.
2. Obtain Court Approval of Any Settlement or Verdict
Most cases settle. North Carolina requires the PR to petition the clerk or trial judge for approval of any compromise (Rule 17(c)). The order will spell out:
- Gross amount recovered
- Attorney’s fee and litigation expenses
- Statutory deductions (medical, funeral, etc.)
- Net amount for distribution
3. Pay Allowed Expenses Before Distribution
From the gross recovery, the PR must first pay, in this order (§ 28A-18-2(c)):
- Litigation costs and approved attorney’s fee
- Reimbursement for reasonable funeral expenses (capped at $4,500)
- Reimbursement for medical care and hospital bills related to the fatal injury (also capped at $4,500)
Anything else owed by the decedent—credit cards, taxes, etc.—does not come out of the wrongful death proceeds.
4. Identify the Statutory Beneficiaries
The remaining balance is shared among the decedent’s next of kin just as if the decedent died without a will owning personal property. That intestate scheme appears in Chapter 29. Key rules:
- Surviving spouse only, no descendants or parents – spouse gets 100 %
- Spouse + one child (or child’s issue) – spouse gets ½, child gets ½
- Spouse + two or more children – spouse gets ⅓, children share ⅔ equally
- No spouse, children survive – children (or their issue per stirpes) share all
- No spouse, no descendants, parents survive – parents share all
- If none of the above, the statute continues to grandparents, siblings, etc.
A will does not control wrongful death proceeds, and a beneficiary can disclaim his or her share under Chapter 31B.
5. Distribute the Funds and Close the Estate
Once the clerk or court signs the distribution order, the PR cuts checks to each beneficiary and files a final accounting showing the payments. Afterward, the wrongful death portion of the estate is closed, although other probate matters may continue.
Helpful Hints
- File the wrongful death lawsuit within two years of the date of death (§ 1-53(4)).
- Keep receipts for every litigation expense; the clerk will require proof.
- Obtain IRS Form W-9 from each beneficiary so the settlement administrator can issue tax forms if needed.
- Wrongful death proceeds are generally not taxable income, but interest earned before distribution is taxable.
- If minors inherit, their share must be placed in a guardianship or a Uniform Transfers to Minors Act account approved by the clerk.
- If multiple heirs disagree on shares, ask the clerk for a hearing to confirm the intestate breakdown.
Ready to take the next step? Distributing wrongful death proceeds correctly protects the heirs and the personal representative from later disputes. Our attorneys have guided many families through this process and can do the same for you. Call us today at (919) 341-7055 to schedule a confidential consultation.
