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How Are Wrongful Death Settlements Paid Out?

November 2, 2021 By Flora Templeton Stuart

Family With Wrongful Death AttorneyWrongful death settlements are received when a loved one dies due to the negligence of another in a personal injury case. State statutes establish how the recovery is paid out to family members, with priority to the spouse or children of the deceased. The recovery, usually from the insurance company, is paid after payment of funeral expenses, attorney fees, and costs of litigation. At Flora Templeton Stuart Accident Injury Lawyers, we work with family members to obtain maximum recovery.

More than 190,000 people die each year as a result of wrongful death circumstances. If your family member has died due to another party’s negligence or other wrongful action, you have the right to file a wrongful death claim. Taking legal action can help surviving loved ones to get financial compensation for the related damages.

In addition to the amount of money you are likely to recover, it is important to understand how the settlement will be disbursed to you. This will enable you to make informed decisions and plan accordingly. So how are wrongful death settlements paid out?

Read on to find out.

What’s In This Guide

WHAT IS A WRONGFUL DEATH SETTLEMENT?

Simply put, a wrongful death settlement is money paid to a victim’s surviving loved ones to resolve a personal injury claim that involves a fatality. The settlement provides compensation for the economic and non-economic losses that survivors sustain as a result of the death of their loved one. A settlement amount may be arrived at through a negotiated agreement or awarded during a trial in court. However, the plaintiffs must prove that the defendant is legally liable for the victim’s death.

The value of wrongful death settlements varies widely depending on the circumstances of the case. However, several factors can impact your wrongful death settlement. They include:

  • The age and state of health of the deceased
  • The income and future earning potential of the deceased
  • Who was responsible and the degree of responsibility for the death (liability)
  • The defendant’s and other insurance coverage
  • Medical expenses, funeral and burial costs, and value of lost benefits
  • Pain & suffering if the deceased suffered before death
  • Your wrongful death attorney

PAYING OUT WRONGFUL DEATH SETTLEMENTS

Once a wrongful death settlement is reached, the designated amount will be paid either by the defendant’s insurance provider or any additional insurance available, such as underinsured/uninsured insurance in a car accident.

LUMP SUM SETTLEMENTS

In most cases, you will receive the full amount due to you all at once. This one-time payment will include all economic and non-economic damages, effectively satisfying the at-fault party’s obligation in full.

There are several benefits of receiving your settlement in a single payment. Receiving a settlement after a verdict or trial in a lump sum is common when adult are the heirs.

STRUCTURED SETTLEMENTS 

Structured settlement payouts allow you to receive payments in installments over an extended period of time.  This means that it will take longer to receive all of the damages due to you. Oftentimes, the payments are made yearly, but can be distributed depending on the agreement the parties make. All the parties entitled to compensation have to agree to this settlement option. Once the payment schedule has been made, it is usually difficult to change the terms of the agreement.

These regular, ongoing payments make for a reliable revenue stream. This ensures long-term financial stability, an important feature especially if you were largely financially dependent on the deceased person. Attorneys, especially with minor children of the deceased, can set up an annuity that is usually paid out over several years once the child turns 18.

WHO CAN BE AWARDED A WRONGFUL DEATH SETTLEMENT?

When it comes to wrongful death cases, damages are designed to compensate the surviving family members. However, not everyone is eligible for a wrongful death settlement. The people who can bring the lawsuit and be awarded a settlement will depend on the state where the deceased person lived. The following individuals may be entitled to compensation.

  • The surviving spouse
  • Surviving children, including adopted children
  • The deceased person’s surviving parent or parents
  • Siblings and often family members if the deceased has no spouse, children, or living parents.

STATUTE OF LIMITATIONS IN WRONGFUL DEATH CASES

Wrongful death claims must be filed within a specified period of time. The statute of limitations for a wrongful death case varies from one state to another. In car or semi-truck accidents in Kentucky and other personal injury cases in Tennessee, the claim must be filed within one year from the date of the death. An experienced lawyer will ensure your case is handled properly so that you do not lose your right to compensation.

HOW ARE WRONGFUL DEATH SETTLEMENTS DISTRIBUTED?

Mostly, wrongful death lawsuits will involve several parties. This means that the settlement may be paid out to more than one party. It is important to understand how settlements are distributed after a successful settlement or court verdict. Funeral costs, legal fees and estate administration expenses will be paid out first. The remaining settlement amount is then distributed. Below are some common scenarios and how the award will be paid out. In Kentucky and Tennessee:

  • If the deceased person was married at the time of death but had no children, the surviving spouse will receive all the proceeds from the lawsuit.
  • If the deceased was married with children, the money will be split among the surviving spouse and surviving children.
  • If there are surviving children but no surviving spouse, the entire amount will go to the children. The settlement will be divided equally among the children.
  • If the deceased person was not married and did not have children, the deceased’s surviving parent or parents will be entitled to receive the entire amount of the award.
  • If the decedent is not survived by a spouse, children or parents, the settlement will go to other family members of the deceased.

ARE WRONGFUL DEATH DAMAGES TAXABLE? 

Generally, wrongful death settlements are not subject to income or estate tax. The Internal Revenue Service (IRS) considers the settlements to be compensatory damages. In short, the money is meant to provide compensation for the economic and non-economic losses suffered by family members following the loss of their loved one, and is therefore not considered income.

However, there are certain instances where wrongful death damages can be taxed. If you are awarded punitive damages to punish the party responsible for the death, the punitive damages may be taxed. The administrator fees are also taxable.

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WHY HIRE A WRONGFUL DEATH LAWYER?

Flora Stuart With Wrongful Death ClientBefore accepting any settlement proposal, you should consult with your attorney or a tax expert. This will help you to understand how the applicable tax laws will affect you and enable you to minimize your tax liability.

Wrongful death cases can be complicated, so consider working with knowledgeable and experienced wrongful death lawyers. At Flora Templeton Stuart Accident Injury Lawyers, our team of attorneys will work hard to ensure your interests are represented and help you get the settlement you deserve. Our attorneys have over 45 years of experience representing families who have lost a loved one due to the negligence of another. Contact us today at (888) 379-3109 for a free case evaluation.

Author Photo

Flora Templeton Stuart

Flora Templeton Stuart is the lead attorney and founder of the law firm Flora Templeton Stuart Accident Injury Lawyers, established in 1976. Flora goes to work every day to make a difference in her community and the lives of her clients. When you call you will get a personal representation and an attorney who truly cares.