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How are Wrongful Death Settlements Paid Out?

April 10, 2020 Published in Wrongful Death

If you have lost someone you love due to the carelessness or negligence of another person or entity, you may have had to file a wrongful death lawsuit in Illinois in order to recover compensation for your losses. These cases are often incredibly complicated, but the damages awarded for a successful claim will help grieving families gain some closure. Many families wonder how wrongful death settlements are paid out after a successful settlement or jury verdict.

Where does the money come from?

When a wrongful death case arises, people typically think that the case involves the deceased’s family members filing a lawsuit directly against the person they believe to be responsible for their loved one’s death. While this may be the case, these claims are often made against the insurance carrier of the at-fault party. In these cases, the insurance carrier is the one to provide legal representation in the case.

Payments for a successful wrongful death settlement or jury verdict will be made by the insurance carrier of the at-fault party or by the at-fault party directly.

Structured settlements versus lump-sum payments

There are two basic ways in which wrongful death settlements are paid – through structured settlements or a lump-sum payout.

Lump-sum payout. When a case is settled out of court, it is not uncommon for a plaintiff (the deceased’s estate) to receive a lump-sum payment of the award amount. With a lump-sum distribution, the victim’s family will receive full payment of the damages awarded, including all financial losses and pain and suffering compensation agreed upon. A lump sum will allow families to pay any large medical bills and legal fees upfront while also eliminating any financial debt that has accrued due to the death have a loved one.

Structured settlement. Alternatively, structured settlements are also an option for death claim payouts. A structured settlement disperses any damages awarded and in a wrongful death claim through ongoing payments to the deceased’s family members. This type of payment will provide continuous support (usually through monthly payments) for a longer period of time, though it takes away the ability to pay off large debts all at one time. Once a structured settlement is agreed upon by all parties, it can be difficult, if not impossible, to change the terms of the agreement.

What type of compensation is available for a wrongful death claim?

There are various types of compensation available to family members in the aftermath of a wrongful death case. Typically, these settlements or jury verdicts are meant to provide compensation for both economic and non-economic losses they family sustains. This can include the following:

  • any pre-death medical bills incurred by the deceased
  • funeral and burial expenses
  • pain and suffering damages
  • loss of future earnings of the deceased
  • loss of companionship damages
  • loss of consortium damages

The total amount awarded for wrongful death claims will vary depending on the factors of each particular case. In Illinois, there are no caps (or limits) on how much can be awarded to family members in a wrongful death claim.

Are wrongful death damages taxable?

Generally, wrongful death settlements are meant to provide compensation for economic and non-economic losses sustained by family members of the deceased. Typically, these types of damages are not taxable, according to the IRS.