a person sitting at a table with a knife

Media / Blog

7 Things to Know About a Wrongful Death Settlement


Cleaning Out Your Financial Closet

April 20, 2021

7 Things to Know About a Wrongful Death Settlement

A wrongful death claim is not something you ever want to have to deal with because it means you've lost someone close to you.

Wrongful death claims stem from the loss of your loved one due to someone else's negligent behavior.

It's important to realize, while the financial elements may not be your top priority, that you may be entitled to recover financial damages if your family member wrongfully dies.

With that in mind, the following are some of the important things to know about a wrongful death claim as well as a settlement.

1. Are Settlements Taxable?

First and foremost, wrongful death settlements are not taxable for the most part. The compensation for physical illness or injury, emotional distress, medical expense compensation, and compensation for loss of income are not taxable specifically.

However, if you were to deduct medical expenses and then these are reimbursed through a settlement, you have to report the original amount as income on your taxes.

There is something else to specify here—punitive damages are often taxable, but it depends on the specific situation.

2. Wrong Death Claims Involve All Types of Accidents

The type of accident we most often think about as being associated with a wrongful death claim and subsequent settlement is a car accident. That is true, but wrongful death claims can also stem from medical malpractice or product liability.

A government agency, company, or individual could be legally held responsible for causing the death of another person if they behaved negligently.

3. Only Certain People Can Sue For Wrongful Death

State laws dictate who can sue for wrongful death. A claim has to be filed by a representative of the decedent's estate on behalf of survivors. The representative is typically the estate executor.

The people who may be able to sue for wrongful death include:

  • Immediate family members. This is true in all states, and immediate family members include spouses, children and adopted children. For unmarried children, their parents can also file a lawsuit and potentially recover damages.
  • Depending on the state, a domestic partner who was dependent on the person who died may be able to file a claim.
  • Some states will let other family members, like siblings or grandparents, bring a claim.
  • Anyone who suffered financially due to the death of the person can file a lawsuit in some states.
  • In the instance of the death of a fetus, the parents may be able to file a wrongful death lawsuit.

4. Only Certain People Can Be Sued

There's actually, in some ways a wider field of people who can be sued for wrongful death than can file a lawsuit.

For example, a government agency can be sued if they didn't maintain the roads properly, as can the maker of a dangerous vehicle part.

If someone sold or gave alcohol to an impaired driver who went on to kill someone, they can be sued, and so can the owner of the place where the alcohol was used.

These are just a few of the many examples.

5. There Is No Average Wrongful Death Settlement

One of the first questions many people have is what the average wrongful death settlement is, and there really isn't one.

Some cases settle for tens of thousands of dollars, while others settle for millions or tens of millions.

There are formulas that can be used to calculate a specific case though, such as the lost future financial support that comes from your loved one's death, medical, funeral, and burial expenses, and intangible losses like loss of affection and loss of companionship.

6. There Are Factors That Can Reduce the Settlement Amount

You may get a settlement that's less than what you expected based on a number of potential factors. For example, if your loved one played some role in an accident, even though they lost their life, it could reduce a wrongful death settlement.

In some states, the settlement might be reduced based on a percentage of their fault.

7. Punitive Damages May Be Awarded

Finally, punitive damages may be awarded in some claims. Punitive damages aren't part of a settlement. They stem from cases that go to court. Punitive damages are meant to punish the wrongdoer who acted negligently or intentionally, and those actions led to someone else's death.

If you receive punitive damages, as was mentioned briefly above, you may have to pay taxes on these, depending on where you live.


How Does A SPAC Work?

About the author

Guest Author

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice.

Investor Disclosures: https://bit.ly/KF-Disclosures

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation.

Sign Up

Sign up for our exclusive Sunday Paper with a weekly market commentary, insightful personal finance blogs, and life changing education guides.

Email sign up

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice. https://Bit.ly/KF-Disclosures

This site is published for residents of the United States only. Registered Representatives of Kestra IS and Investment Advisor Representatives of Kestra AS may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all products and services referenced on this site are available in every state and through every representative or advisor listed. For additional information, please contact Kestra IS Compliance Department at 844-553-7872.

PLEASE NOTE: The information being provided is strictly as a courtesy. When you link to any of the web sites provided here, you are leaving this web site. Kestra IS and Kestra AS makes no representation as to the completeness or accuracy of information provided at these web sites. Nor is Kestra IS and Kestra AS liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, web sites, information and programs made available through this web site. When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for your use of the web sites you are linking to.