When a lawsuit involving a deceased plaintiff settles, the litigation may end long before the estate is ready to receive and distribute the settlement proceeds.  This is particularly true when additional proceedings are required in the Surrogate’s Court before the fiduciary may distribute funds to the estate’s beneficiaries.

Unfortunately, Surrogate’s Court proceedings often require specialized knowledge, experience, and substantial time to complete, and months may pass between the settlement of the underlying litigation and the issuance of the authority necessary to distribute settlement proceeds, i.e., Letters.  During that time, both plaintiffs’ counsel and defendants may find themselves in procedural limbo.  Defendants want finality, while Plaintiffs’ counsel wants to conclude the litigation, collect the settlement proceeds, and move the matter toward completion.  Lack of knowledge and experience can result in years-long delays to obtaining the necessary Surrogate’s Court approvals, which creates practical problems for everyone involved.  In some cases, extreme delays in case resolution can result in unnecessary motion practice seeking dismissal of the case or invalidation of the agreed-upon settlement.

An application pursuant to EPTL § 5-4.6 may provide an effective solution, as it is a Petition, Attorney’s Affirmation and Proposed Order made directly to the Court in which the underlying action is pending.  Rather than wait for the Surrogate’s Court to complete every aspect of the estate proceeding before settlement documents can be executed and settlement proceeds issued, this Petition allows counsel to seek authority to finalize the settlement and collect the proceeds while the remaining estate-related proceedings continue separately.

An Order issued pursuant to EPTL § 5-4.6 may authorize the fiduciary to execute documents necessary to conclude the litigation, such as Settlement Agreements, General Releases, and other documents required by defendant(s), insurer(s), or settling parties, permits the settlement check to be issued, received, and deposited into the attorney escrow account.  The Court may permit counsel to pay themselves their approved attorneys’ fees and the reimbursement of case disbursements from the settlement proceeds. This can be particularly advantageous because certain Courts may permit reimbursement of litigation-related expenses that may not always be recoverable in the same manner through subsequent Surrogate’s Court proceedings.  Depending upon the circumstances, those expenses may include items such as postage, copying, mileage, tolls, parking, transportation expenses, and other litigation-related disbursements incurred during the prosecution of the action.

However, an EPTL § 5-4.6 Order does not generally authorize distribution of the decedent’s share of the settlement proceeds to the estate beneficiaries.  Following payment of approved attorneys’ fees, disbursements, liens, and other authorized expenses, the remaining proceeds typically remain in attorney escrow pending further authority from the Surrogate’s Court.  Depending upon the county and the nature of the underlying claims, distribution may still require a Death Compromise Proceeding, Petition to Lift Restrictions, Amended Probate Petition, Amended Administration Petition, or another Surrogate’s Court application to collect these funds.

EPTL § 5-4.6 is not a substitute for the Surrogate’s Court process, but rather, it serves as an important procedural tool allowing litigation counsel to secure the settlement proceeds, conclude the underlying litigation, and avoid unnecessary delays while the estate-related issues continue through the Surrogate’s Court.  Many attorneys are unfamiliar with the advantages offered by EPTL § 5-4.6, particularly when the application is made promptly following settlement.  Understanding when the petition is appropriate and how it fits within the broader settlement collection process can often save substantial time and avoid complications for both plaintiffs and defendants.

Surrogate’s Court Solutions, LLC regularly assists attorneys with EPTL § 5-4.6 Petitions, Death Compromise Proceedings, Petitions to Lift Restrictions, Amended Petitions, supporting affidavits, proposed Orders and Decrees, kinship-related filings, and other applications arising from the intersection of litigation and estate administration.