One of the common questions asked by clients about a wrongful death claim following the loss of a loved one is whether their compensation is taxable. The answer is…it depends. In the following, we will explore what wrongful death is, what losses family members can claim, the two different types of claims and what is not taxable.
David Azizi has successfully handled numerous wrongful death cases in Los Angeles in the past 23 years. He offers clients compassion and a dogged belief that a wrongful or negligent act cannot pass without justice. As families work their way through grief, David is there every step of the way. Call him if you believe a family member died due to an intentional act or reckless behavior. Call today to schedule a free case review. David successfully resolves 98 percent of his cases – let him take the burden from you in this harrowing family time.
Are the Settlements in These Claims Taxed?
Compensatory damages are not considered taxable by the Internal Revenue Service. Compensatory damages are meant to compensate the parties involved for losses they have already suffered. Since the loss was in the past, it is not considered taxable income. However, if the taxpayer took a deduction for medical expenses related to the accident in a prior filing, the award in a wrongful death lawsuit for medical costs is considered income and is taxed.
Compensatory damages for mental anguish and emotional distress may not be taxed if they spring from the accident. However, if they did not originate from the accident, they are taxed. It is vital to refer to IRS guidance on this matter or contact an accountant.
In some cases, the survival action may be against a large corporation, such as the manufacturer of a dangerous product that results in a significant award. Because the awards can be relatively high in some cases, the IRS analyzes the damages and can challenge how the settlement is structured. According to the IRS, punitive damages are taxable and reported as income on the taxpayer’s 1040 filed.
What Is a Wrongful Death?
A wrongful death occurs when the negligent or intentional actions of another individual or entity caused the demise. Although most wrongful deaths occur because of traffic accidents, they can happen in other ways, including product liability, medical malpractice, falls, agriculture accidents and others. A personal injury lawyer experienced in handling wrongful death claims can help a grieving family obtain compensation for their loss. This compensation not only helps the family avoid the financial stress that can occur with their loved one’s sudden death but, in some cases, can offer them the satisfaction of knowing that the at-fault party in an intentional death will face financial consequences for their actions.
What Can Be Claimed in a Wrongful Death?
A civil action can be filed by the deceased person’s estate or household members who were financially supported by that person, at least in part. A wrongful death claim can also be filed against more than one individual. For example, when a negligent truck driver causes the person’s death because the vehicle’s brakes failed, they may not be the only one who is liable. The trucking company might also be liable since it employs the driver and both are responsible for the proper maintenance of the vehicle. Damages that can be claimed include economic and non-economic losses such as the following:
- Funeral and burial costs
- The loss of future income the decedent would have provided
- Loss of inheritance
- The value of the deceased person’s household services such as vehicle and lawn care, childcare, etc. are included
- Loss of guidance, moral support, community, affection, consortium and love
What Legal Actions Are Available?
There are two separate legal actions that family members can file to obtain justice and compensation for losing their loved one. Both are civil claims. Consulting with a lawyer to understand the difference in those actions and which would be best for your claim can be helpful:
- Survival Action: Under California Code of Civil Procedure §377.30, the deceased person’s estate representative can bring a survival action against the defendant. A survival action is that which the deceased person could have brought against the offending party had the decedent survived the injury. Damages in these cases include medical costs, income that was lost, and property damage. These damages are awarded to the estate and will be distributed by the estate to the family members. If the death was intentional or egregious, the court might award punitive damages, which are an additional amount meant to punish the wrongdoer and deter them from reoffending. Punitive damages are often more than is paid out either in a survival action or wrongful death claim.
- Wrongful Death Claims: California Code of Civil Procedure §377.60 states the family members, including the spouse, children, parents, etc., who received at least 50 percent of their support from the decedent may file for wrongful death.
Free Case Review with a Los Angeles Wrongful Death Law Firm
David Azizi works hard, using his legal understanding and years of experience to right the wrong of wrongful death. He protects the deceased’s rights as well as those of his or her family. He offers a comprehensive approach to wrongful death. Talking with David in a free case evaluation helps families learn their options during a financially difficult time. Call David at (800) 991-5292 to set up a free scheduled appointment at the law office, either on the phone or using a virtual consultation. You’ll learn why such respected legal ranking companies such as Super Lawyers call David one of the top personal injury lawyers in Los Angeles.