How Are Wrongful Death Settlements Paid?

How Are Wrongful Death Settlements Paid?

A wrongful death settlement reimburses a grieving family and can cover their financial losses from losing a loved one, such as medical and funeral expenses. The process resembles other California personal injury settlements, with slight differences between the two approaches.

Wrongful death settlements are new territory for most families, where they must first successfully file and win a claim and then receive payment. People often wonder how compensation works for these kinds of settlements, and a wrongful death lawyer will inform you of your payment options.

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Damages Available for Wrongful Death

Damages are losses the family suffers or will suffer from losing a loved one, and you can get damages through a settlement or trial verdict. Every case is unique, but standard damages are available for most claims, including:

Funeral and burial expenses

One of the first expenses you will pursue is funeral and burial expenses. Putting your loved one to rest can financially burden the family, and bills can quickly add up if there are no preparations for this situation.

Loss of consortium

Loss of consortium damages compensate for the loss of love, affection, and companionship. Surviving spouses or children can seek this loss; others who depended on the deceased for emotional support may also qualify for these payments.

Lost inheritance

You can recover expenses for lost inheritance if the deceased had assets they should have left to their surviving family but used to pay for unsuccessful medical treatment. You can incorporate these damages into your wrongful death claim.

Pain and suffering

Cases with long-term pain often seek damages from pain and suffering. These hardships can also apply to wrongful death claims in California, where surviving family members may request compensation for their mental anguish and emotional distress from losing their loved one.

Survival actions

Aside from a wrongful death claim, you can apply for survival actions, which reimburses the estate for losses. Often, the deceased would have filed this lawsuit had they survived. It requires the person to have lived for a period of time after suffering the initial injury.

Punitive damages

You cannot obtain punitive damages in a wrongful death claim but you can in a survival action. Families often take both measures to get the maximum compensation allotted, where survival actions reimburse the estate, and wrongful death claims reimburse the family directly.

However, other circumstances can affect the settlement amount, including:

• Age of the deceased: Age is a significant factor because it shows how much longer the deceased should have financially contributed if they were alive. Settlements can be higher if the person died at a younger age, so the court will use average life expectancy rates and other assessments to determine how age impacts the claim.
• Income and earning capacity: Earning and income are significant in settlement agreements. The more the person contributed to the home, the more the court will award. If they had a high earning capacity or were the primary breadwinner, this can lead to a higher settlement.
• Relationship between the survivor and deceased: The plaintiff’s connection to the deceased is also significant. The payment will increase if they provided substantial financial support to the plaintiff; therefore, you must assess their household contributions.
• Expenses: A settlement may include medical costs incurred by the deceased before their passing. Funeral or burial costs are significant expenses to include.

While these are the most common and significant factors, others may affect your settlement amount. A local wrongful death lawyer can explain what situations apply to your claim.

Average Wrongful Death Settlements

Estimating your potential settlement is complicated because every case is unique and requires an individual assessment. Sometimes, families walk away with $10,000 or less, whereas other times, the result can be in the six or seven figures.

Higher settlements usually come from litigation and trial, but only sometimes. There is no average because many factors go into calculating payments, and the insurance negotiations will also impact your case.

Length of Wrongful Death Claims

Insurance companies often have 40 days to respond to a demand letter, and some insurance companies will take every second possible to delay claims. Sometimes, they will extend the process based on needing a deeper investigation. A claim with complex legal issues or that goes to trial can take longer.

A wrongful death attorney will attempt to settle quickly. However, your lawyer’s priority is to get you the maximum reimbursement possible, so it might take longer than expected. Once you reach a settlement, receiving funds can take up to six weeks.

Paying Taxes on Wrongful Death Settlements

A wrongful death settlement does not apply to earned income. You may not have to claim it on your taxes because federal law dictates that payments for injury, physical illness, or death are nontaxable. Some exceptions apply to this rule, such as if you previously listed any expense as a deduction on tax forms.

Punitive or exemplary damages can lead to taxes, though this is rare in personal injury cases.

Because of the complexity of these situations, work with a tax professional and personal injury lawyer.

Lump Sum Payments

When you settle, the insurance company will give you several choices. They usually will offer either a lump sum or a structured settlement. The option that most people are familiar with is a lump sum, which is a one-time payment for the total damages. You get one check for the sum you agreed to, and you can use this to pay off any expenses outright instead of over time.

You can open a trust if you prefer a structured settlement but have gotten a lump sum. The trust fund allows you to establish regular payments over more extended periods and has the same premise as a structured settlement, except you get your check outright. The most significant benefit of lump sum payments is having the funds to pay down debts. The primary obligations you will have from the wrongful death are medical bills, funeral costs, and legal fees, and there might be other debts to consider.

Paying off any pending debts upfront is more manageable than paying over time and accruing interest. These fees can make it a longer process to pay down these accounts. Another benefit is you do not have to worry about potential nonpayment that can happen in a structured settlement.

The biggest drawback to a lump sum is that some people find it challenging to manage and may use it unwisely. Sometimes, they do not spend it on the deceased’s debts and instead purchase other items. Later, they face these debts with no ability to pay for them. Work with a financial planner if you choose to get a lump sum payment and don’t know how to manage the funds.

Structured Settlements

A structured settlement is the opposite of a lump sum and involves insurance companies paying you over a period of time. These payments may help manage the claim and pay for long-term losses and can come annually, bi-annually, or monthly. Your wrongful death attorney will review the terms before you accept because you cannot change the terms of a structured settlement.

You can sell some of your rights to future payments through an annuity, which is one way to change your structured settlement into a lump sum payment. It might work best for people with unexpected costs or a financial change. However, you may lose out on money using this method, and the court must approve these changes.

The key benefit of a structured settlement is long-term financial stability, which helps when the deceased is a primary source of income for the home. The structured settlement is a consistent revenue source, helping families slowly adjust to the financial loss they suffer.

The biggest drawback is that you must wait to pay off debts and make payments until you resolve any pending debts. That can lead to a longer payoff and added interest for the unpaid accounts.

Another drawback is how inflexible the terms of the agreement are. If the court does not approve your changes, you cannot change the current structure. You also risk nonpayment because these agreements last for several years, and a payment may not come through. A personal injury lawyer can mitigate these risks if this is the path you want to take.

Who Receives the Money?

Depending on the type of claims and who files them will determine who receives the money. Potential recipients may include spouses, domestic partners, children, grandchildren, etc. Next of kin, parents, siblings, and other relatives may qualify to file a wrongful death claim.

The order as to who will receive payment first goes as follows:

• Spouse: The surviving spouse is the first person who can file and receive a settlement. Even when multiple parties are in the claim, they will be the first to get a portion of the payment.
• Children: Next are any surviving children, including biological children, adopted children, and stepchildren.
• Parents: A few cases may allow parents to recover compensation. The first is when the deceased is a minor, and the second is when the deceased did not have a spouse or living children.
• Other dependents: Other relatives may file wrongful death claims. These individuals include anyone who does not fit into the other three categories, like siblings, grandparents, etc.

Sometimes, the court can disburse a settlement between multiple parties. The estate will receive the funds for survival actions and then distribute them accordingly. Occasionally, they will use it to pay off debts. The estate will receive reimbursement for the losses if the deceased had no surviving family members.

Where Does the Money Come From?

The factors of the case can determine where the money comes from. Usually, the defendant’s or at-fault party’s insurance company will cover the payments. They will have an attorney handling the process to mitigate their losses, and once both parties reach terms, the insurer will provide financial compensation.

The defendant who caused your loved one’s death may not pay anything out of pocket to you, yet they may face an increase in their insurance rates in the future.

However, if the settlement surpasses insurance policy limits, things can change. The insurance company will provide payment up to their policy limits, and if you deserve more than that, the defendant must pay the rest. The defendant will send payments until they pay off the settlement. These circumstances can delay a family’s much-needed financial compensation.

Greg Bentley & Keith More Wrongful Death Attorney in Orange County

An uninsured defendant must pay the entire settlement out of pocket. Often, uninsured defendants take advantage of this situation because the payment can reflect their financial situation, meaning you can get less than your case is worth. A wrongful death lawyer may find other sources of income or assets the defendant has to get you compensation.

Call a Wrongful Death Lawyer Today

We understand how challenging it is for you after this loss, where you have difficulty focusing on the future.

You must speak to a wrongful death attorney near you so they can assess your case factors and work to get you the compensation you deserve.

Get an initial consultation with a personal injury lawyer in Orange County today.

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