How Are Wrongful Death Settlements Paid?

How Are Wrongful Death Settlements Paid?

Few things in life are as painful as the death of a close family member, especially when the loss results from another person’s negligent actions or behavior. Not only must you deal with the emotional pain of losing someone you care about, but you also want to know what to do next. Thinking about whether to seek financial compensation may, understandably, not top-of-mind after such a catastrophe. However, eventually you should consider taking steps to ensure any party that is responsible for causing the death is held to account and compensates you for loss of your loved one. That’s what a wrongful death claim aims to do—recover financial damages stemming from the death of a close family member. Do not hesitate to learn more by consulting a wrongful death attorney near you, as acting quickly is often important.

How Do Wrongful Death Claims Work?

People file wrongful death claims when someone’s dangerous behavior or negligence results in the death of another person. A wrongful death claim is a civil action that enables the victim’s loved ones to obtain compensation. Often, the state may file separate criminal charges if they believe the defendant’s actions were illegal. However, the outcome of a criminal proceeding does not replace a civil claim, as a conviction punishes the defendant instead of compensating the grieving family. Wrongful death claims commonly follow:

• Car accidents
• Medical malpractice
• Workplace accidents
• Defective product accidents
• Elder and nursing home abuse
• Semi-truck accidents
• Accidents with pedestrians
• Slip and fall accidents

No matter how a wrongful death occurs, a successful legal case requires that the death resulted from another party’s careless, negligent, or purposeful actions. A thorough evaluation of facts and circumstances surrounding the fatality is necessary to establish liability. A skilled attorney will obtain all the evidence from the accident scene, interview witnesses, consult experts, and identify what party or parties are financially responsible.

Who Pays the Wrongful Death Award?

Although every case is unique, insurers of the responsible party are generally required to pay in a wrongful death case. Even when insurance companies must pay an award or settlement on behalf of their policyholders, they will only pay up to their insured’s policy limit. Many times, that limit is insufficient to cover the totality of damages sustained in the case. What’s more, insurance providers seek to pay as little as possible or show their insured has no fault for the death. For these reasons, retaining a reputable and experienced wrongful death attorney is a must if you are going to obtain full compensation for a wrongful death case.

How Are Wrongful Death Awards Paid Out?

Successful claimants generally receive the funds from a wrongful death case in one of two ways: structured settlement or lump-sum payout.

Structured Settlement

The structured settlement option allows the full amount of the verdict or settlement, often invested, to be split up into monthly payments to the victim’s family members. All entitled parties must agree to this form of payment, and the payout arrangement is tough to change after the fact. The advantage of a structured settlement is that they provide long-term financial support to the family. The main disadvantage, however, is that there is less flexibility and it is much harder to pay off larger expenses through this option.

Lump-Sum Payout

The victim’s family may receive one lump-sum payment for the entire award amount. The parties must agree on the settlement amount, which includes financial and non-financial considerations such as loss of companionship and pain and suffering. A lump-sum payment does not change the value of the case, it just allows the family to have all the money for their losses at once.  Damages in wrongful death cases are generally higher than other types of cases, and include:

• Loss of financial support to the family
• Medical expenses
• Funeral and burial costs
• Loss of love, guidance and comfort
• Loss of consortium (if the deceased was married)

Check with your attorney to see if your state applies any caps or limitations to the amount awarded in wrongful death cases and to determine who is eligible to pursue compensation.

Are Wrongful Death Damages Taxable?

The Internal Revenue Service (IRS) states most wrongful death settlements are not subject to income tax or estate tax. That’s because damages listed in a wrongful death settlement are generally “compensatory damages.” The purpose of compensatory damages is to recover damages and make an individual or party whole. Here are a few examples of the types of compensatory damages often included in wrongful death cases:

• Loss of deceased’s income and future earnings
• Loss of pension plan
• Loss of inheritance
• Loss of medical insurance coverage
• Mental anguish
• Loss of care, support, and companionship

You should consult a wrongful death attorney and your accountant to see how tax laws in your area might affect you. In some circumstances, you may be liable for some taxes. Of course, you’ll want to work with your attorney closely to make sure you construct your settlement in a way that minimizes your tax liability.

How Do I Pay for a Wrongful Death Lawyer?

Many people considering a wrongful death claim have concerns about the cost of legal representation needed to file a claim. Most wrongful death attorneys, however, represent their clients on a contingency fee basis. That means you do not pay any upfront fees unless the wrongful death attorney successfully obtains an award or settlement on your behalf. When you work with an attorney on a contingency fee basis, you only pay if the attorney recovers damages with your claim. If the claim is unsuccessful, you pay nothing. Contingency fees are a percentage of the amount recovered by your attorneys. Any attorney you work with should make clear what percentage of the recovery they will be paid if your case is successful. The main benefit of contingency fee agreements is that they allow you to pursue your claim regardless of your financial situation. Additionally, the agreement effectively incentivizes your wrongful death attorney to diligently take all the necessary steps to receive the maximum compensation allowable by law, because that’s the only way they get paid. Contact Golden State Lawyers, LLP for a free consultation today.