We know that most lawyers are aware of EPTL 5-4.26, but some lawyers just aren’t taking advantage of it and we don’t understand why that is.
Normally, when we settle a case on behalf of a deceased person, the surrogate court must approve a death compromise order before the heirs or beneficiaries can receive any money. The same holds true for the lawyers who spent many hours working on the case. It is quite possible that the court could take months or even years before they approve the settlement.
That is why Section 5-4.26 was enacted a few years ago. Section 5-4.26 enables lawyers to ask the Supreme Court to expedite this process. Once the Supreme Court approves the amount, a lawyer can, upon meeting certain conditions, take their fee while holding the distributees’ settlement monies in an escrow account until the surrogate court approves the death compromise order. Although the family cannot receive their money earlier, their funds will earn interest in the escrow account.
Here is an example of sample of language of what we seen used at Supreme Court while preserving the right to structure with the Surrogate Court still having to do final allocations:
“ORDERED, that plaintiffs and defendants anticipate that some portion of the remaining settlement monies shall be used to fund structured settlement annuities for the benefit of the distributees of the Estate of Plaintiff, with the terms subject to Decree of the Surrogate’s Court, Kings County regarding the distribution of the settlement proceeds”
This order also ensures that the client is protected in case the insurance company liquidates in the interim and cannot pay the claim. .
This law is also important because some surrogates don’t approve structured settlements; we presume that this is because some Surrogate Court judges don’t understand structured settlement as well as judges in the Supreme Court. But having the Supreme Court judge approve the structured settlement in the EPTL order opens the door to getting into the death compromise order. Either way, using Section 5-4.26 provides an extra layer of protection for clients and enables lawyers to get paid soon after the case has been settled. It’s a win-win scenario from our vantage point and something all lawyers should be taking advantage of.
Have you taken advantage of Section5-4.26? Did this enable you to receive your legal fee in an expedited manner? Please share your story with us. We would love to hear of your experience.