Compensation for wrongful death is paid out in a lump sum or structured settlement. Settlements paid out in a lump amount are given to the recipient all at once.
In contrast, the beneficiaries of a structured settlement get a predetermined amount of money at regular intervals after the death of a loved one.
The payment terms of a wrongful death settlement are negotiable between settling parties. Depending on the specifics of your case, a wrongful death payment may be distributed in several ways.
What Are the Recoverable Damages in a Wrongful Death Settlement?
Wrongful death settlements are often larger than other types of civil settlements. A settlement may cover your financial losses due to your loved one’s wrongful death. The total cost of these damages usually reaches six figures, but it will differ in each claim.
The recoverable damages could include:
- Burial and funeral expenses
- Loss of future earnings of the deceased
- Retirement contribution
- Employee benefits losses
- Non-economic damages, including grief, mental anguish, and emotional distress
Who Can File a Wrongful Death Lawsuit in Texas?
Multiple aspects of a case are weighed in the case of wrongful death. Before going further on how wrongful death settlements are paid out, it is important to know who can make a claim. Under Tex. Civ. Prac. & Rem. Code § 71.004, claimants can be:
- The deceased person’s spouse
- The parents or children of the deceased
- The executor of the decedent’s estate
Damages sustained by the decedent and their estate are compensated through survival claims. The deceased person’s last expenses, such as outstanding bills and taxes, must be covered.
Factors Affecting Wrongful Death Settlements
Negotiations and personal injury lawsuit settlements are time-consuming and difficult. You might settle for less than you deserve if you don’t have a wrongful death attorney by your side. In a wrongful death lawsuit, the amount of settlement is dependent on many variables, including
- Who was at fault for the accident
- What the insurance policy limitations are
- Whether or not the driver was working at the time of the accident
- What the decedent’s pre-accident wage was
Successfully gliding through the complexities of a wrongful death lawsuit requires the skill of a competent personal injury attorney in Texas. Contact our attorneys to discuss your case.
Paying Out Wrongful Death Settlements
The insurance company or the person at blame for the death must pay you the agreed-upon sum after reaching a wrongful death settlement. You may get the proceeds of your settlement in one of two ways:
Lump Sum Payout
When you take a lump sum amount for your wrongful death settlement, the amount is paid in one go. When you get a chunk, you may take care of high-dollar costs like medical and legal fees without needing interest charges.
All damages, whether monetary or otherwise, agreed upon throughout the settlement process are included. You have an amount to save, spend, and invest. If the lump sum payout is invested and generates income, it will be liable for taxes.
If you choose to receive your settlement funds in a structured settlement, you will receive installments following a predetermined schedule. If you have settled, you may expect to receive monthly payments; however, the exact timing of these payments will be determined by the terms of the agreement.
A structured settlement might make it more difficult to pay off debt and other costs promptly because of the time it takes to get the whole amount of compensation you are owed. If you still have questions about how wrongful death settlements are paid, consult a wrongful death lawyer in Texas. Get a comprehensive reading of your case, and understand your rights.
Are Wrongful Death Settlements Taxed?
Payments made in settlements for wrongful death are designed to address both financial and emotional losses. However, this does not necessarily exclude taxation. The Internal Revenue Service (IRS) may take a cut of your wrongful death compensation, but they won’t tax all of it.
Typical payouts include compensatory (economic) damages to cover quantifiable monetary losses. When someone else’s extreme carelessness directly leads to the death of your loved one, punitive (non-economic) damages are granted to compensate for your emotional loss.
Under26 USC § 104(a)(2), any amounts determined to be compensatory are excludable from gross income and won’t be subject to taxation by the IRS. But under 26 USC § 104(c), any amounts determined to be punitive are considered “other” income and are not excludable. These will be taxed.
In the case of a deceased person’s estate receiving a settlement, the settlement is subject to taxation throughout the probate process.
How Are Wrongful Death Settlements Distributed?
Depending on the circumstances, a wrongful death payout may be divided among many recipients. The connection between a deceased person and their surviving spouse or children may mean that the former is entitled to a larger inheritance than the latter.
Texas law doesn’t allow wrongful death settlements to be passed on to minors. Thus, a trust must be established to manage the funds until the kid reaches the age of majority. Compensation for an incapable adult may also need to be handled through a trust.
The distribution of wrongful death settlement money is a common conflict in wrongful death claims, which often include several plaintiffs and defendants. If someone you care about has died due to the negligence of another, hiring a wrongful death attorney in Texas may ensure that your claims are covered and that you get a fair payout.
Unsure Which Path to Take With Your Wrongful Death Settlement Payout?
The Buzbee Law Firm can help you determine how you want to receive your payout if you decide to file a wrongful death lawsuit. Your case is important to us, and we’ll sit down with you to go through it. We’ll also review your financial situation and requirements so that you may make the best option possible for you and your loved ones.
Our personal injury attorneys understand how devastating wrongful death cases are for families and always take a caring stance while working with you. We aim to have all you need to secure your financial future. Contact us today to begin a free consultation.