How Are Wrongful Death Settlements Paid Out?
When a loved one’s life has been lost because of the negligent or intentional actions of another party, you may be able to seek justice through a wrongful death lawsuit. A wrongful death settlement will not replace your loved one’s presence in your life, but it could provide crucial compensation. This compensation may be used to ease the financial burden on your family, such as to cover medical bills, to supplement lost wages, and more. These cases can be complicated and stressful, so it is important that you reach out to an experienced wrongful death lawyer for representation.
Understanding Wrongful Death Cases
Are you wondering if you have a strong wrongful death case to pursue? If your loved one’s life has been taken because someone else failed to act or acted inappropriately, you may have a case. Any time a life is lost and negligence can be proven as the direct cause, family members may seek a personal injury settlement. This is regardless of the outcome of a criminal case against the other party.
In addition to covering medical bills and lost wages, a settlement’s payout may cover funeral costs, pain and suffering, lost inheritance, loss of companionship, and punitive damages. Your personal injury attorney will be able to tell you more about the potential payout for your case after an initial consultation.
Payout Options for a Wrongful Death Settlement
Often, the other party will make a lowball offer rather than risk letting the court decide on the case. Your experienced attorney will be able to provide you with detailed guidance if you are presented with an offer. Through this guidance, you can avoid accepting an offer that is far below what the court may decide.
A wrongful death settlement is usually paid by the other party’s insurance company when he or she has appropriate coverage. If the settlement is higher than the insured’s coverage limit, the other party will be personally responsible for the rest of the amount. If there is no insurance coverage, the other party is fully responsible for the settlement amount. Regardless of who is responsible for paying the wrongful death settlement, there are two possible payment methods. Generally, the court will decide which of the payment methods will be used.
One of the payment options is a lump-sum payment. If you are awarded a lump-sum payment, you will receive the full amount of the settlement at one time. This payment option has advantages, such as the ability to pay large, related expenses at one time. These may include legal fees, medical expenses and more. You may also be able to manage your funds more easily when you receive them in full up-front.
The other payment option that the court may mandate is a structured settlement. With this payout option, the court will create a payment schedule so that you receive regular monthly payments for a period of years and until the settlement has been paid in full. Usually, the settlement amount accrues interest throughout the life of the payment plan. With a structured settlement, you may not be able to pay off large expenses at one time. However, you may find it easier to supplement lost wages when you receive regular monthly settlement payments.
Taxation on Settlement Payouts
As you prepare your finances for the settlement payout that you may receive, it is important to understand that certain portions of the payout may be taxed by the IRS. This is because taxes can dramatically erode the financial benefit that you receive from a wrongful death settlement. Generally, the portion of a payout that is compensatory is not taxed. This covers the portion of the payout that may be used to pay for funeral expenses, medical bills, lost wages, and other direct expenses that resulted from the incident in question.
On the other hand, punitive damages may be taxed. They are generally required to be reported as other income on the recipient’s tax return. In addition to punitive damages, the funds that pass to the deceased’s estate could be taxed. These funds must pass through the probate process and are subject to related taxation. It may be advisable to work with an experienced accountant when determining which portion of your wrongful death lawsuit’s settlement payout may be taxable.
Do you have more questions about wrongful death lawsuits? The personal injury lawyers from Golden Law Office are available to help. Contact a wrongful death lawyer at our law firm today for more information and to discuss the details of your potential case.
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