Estate Issues After a Wildfire: When the Decedent Was a Survivor

Mass-tort wildfire proceedings of any size run for years. The Lahaina proceeding produced a settlement framework in 2024; allocation work continues. The Eaton fire proceeding is in earlier stages. By the time any individual claimant's allocation is finalized, the legal landscape — and sometimes the people involved — can have changed significantly.

In particular, some of the people who survived the original event, and whose claims were filed in the proceeding, will not live to see their allocation. This post is a short look at how families navigate the intersection of probate or trust administration and ongoing wildfire-settlement participation when a survivor passes away.

What happens to the claim when the survivor dies

The survivor's claim does not extinguish at death. Instead, it becomes part of the survivor's estate, and is administered the same way other estate assets are — by a personal representative under a probate proceeding, or by a successor trustee under the survivor's revocable living trust if the claim was assignable into the trust during life.

Two practical points:

• A claim filed in a coordinated proceeding before the survivor's death continues under the same docket and procedural framework. The survivor's representative substitutes in to continue the case.
• A claim that was eligible but not yet filed at the time of the survivor's death generally remains available to the estate, subject to the applicable statute of limitations and any tolling rules. Whether to file should be evaluated promptly because the procedural windows may be narrower than they appear.

In either case, having the substitution paperwork in place — letters of administration or letters testamentary in a probate; trustee certifications and successor-in-interest declarations in a trust administration — is what allows representation to continue without procedural friction.

Probate vs. trust administration

For a survivor who had a properly funded revocable living trust at death, the wildfire claim, if it was assignable into the trust, is administered by the successor trustee under the trust's terms. The trustee deals with counsel, signs settlement documents, and distributes the eventual proceeds to the trust's beneficiaries under the distribution provisions.

For a survivor who did not have a trust, or whose trust was not properly funded to capture the claim, the wildfire claim is generally administered through probate. The personal representative, appointed by the probate court, performs the equivalent functions on the probate side.

Two practical implications:

• A trust administration is generally faster and less expensive than probate, particularly in California where statutory probate fees are calculated on the gross value of the estate. For a survivor whose principal post-fire asset is the wildfire claim itself, the difference between trust and probate administration can be substantial.
• The claim's value at death matters for estate calculations. The fair-market value of the claim at the date of death is the relevant figure for estate tax (where applicable), basis step-up analysis, and distribution accounting. Valuing a contingent unliquidated claim is its own exercise.

For survivors with significant estates and ongoing wildfire claims, having the trust funding done correctly — including, where appropriate, an explicit assignment of the claim into the trust during life — avoids the harder version of this exercise after death.

Wrongful death versus survival

A separate but related question: where the survivor's death was caused by the underlying fire (or by injuries sustained in the fire that contributed to a later death), the family may have wrongful-death claims of their own, distinct from the survivor's estate's claim.

In general terms:

• A survival action, brought by the estate, recovers what the decedent could have recovered if they had lived to litigate their case
• A wrongful-death action, brought by surviving family members, recovers for the family's loss — companionship, support, and similar elements

Hawaii and California each have their own framework for these claims, with their own statutes and their own measures of damages. Both kinds of claims may be filed in connection with the same underlying death; they are evaluated separately.

For families in this situation, both kinds of claims should be considered in the early case work — not because they ought to drive the analysis on their own, but because preserving the option to bring either or both means tracking the procedural windows for each.

Tax considerations

Wildfire settlement proceeds received by an estate or by a decedent's beneficiaries have their own tax considerations, beyond the general tax treatment described in the related post on settlement tax. Among them:

• Income in respect of a decedent (IRD). Some categories of post-death recovery are treated as IRD, with consequences for both estate-tax inclusion and the recipient's income tax.
• Basis step-up. A claim that passes at death generally receives a basis adjustment. The interaction between the basis step-up, the property loss, and the eventual settlement is non-obvious.
• Insurance integration. Insurance proceeds received before or after death have their own treatment, which interacts with the tort recovery.

A qualified tax advisor familiar with both estate administration and disaster-relief tax issues is the right resource. The legal team and the tax advisor should be in coordinated communication during this phase.

What families can do

For a family navigating this situation, two practical steps:

1. Get the substitution paperwork started early. Whether through probate or trust administration, having the personal representative or successor trustee positioned to act in the wildfire proceeding avoids procedural delay later.
2. Coordinate the legal teams. The estate-administration counsel, the wildfire counsel, and the tax advisor should communicate. Each is doing work that affects the others, and small misalignments can produce large unintended consequences.

If you are in this situation and want help sorting out how the pieces fit, please reach out. The firm handles both estate administration and mass-tort wildfire matters, which makes the coordination work straightforward in many cases.

This article is general information and not legal or tax advice. Estate administration, mass-tort participation, and tax treatment of post-death recoveries are all fact-specific; specific situations need specific review with current authority.