Are Wrongful Death Settlements Taxable - De Castroverde Law Group (2024)

November 22, 2022

Wrongful death settlements are generally non-taxable, according to the Internal Revenue Service (IRS). Since a wrongful death settlement is considered an allocation for physical injuries and sickness, it is exempt from most taxes.

However, certain exceptions may apply in the case of punitive damages and other losses. If you aren’t sure whether any of your wrongful death settlement is taxable, a wrongful death lawyer at De Castroverde Accident & Injury Lawyers can evaluate your claim and explain your tax obligations.

Taxable Vs. Non-taxable Damages in a Wrongful Death Settlement

Although the IRS doesn’t generally tax wrongful death settlements, it may tax portions of your damages in specific circ*mstances, such as:

Your medical bills taken from the income you earned in previous years
Emotional distress if your anguish did not result from the accident-related injury or illness
Punitive damages

Your lawyer can determine if the IRS might tax your wrongful death settlement.

What Constitutes a Wrongful Death Case?

Wrongful death cases allow surviving family members to obtain compensation when they have lost a loved one due to someone else’s negligence. When you pursue a wrongful death lawsuit against the party responsible for your loved one’s demise, you may be able to seek compensation for financial and non-financial losses, including:

Hospital bills and medical expenses incurred due to the injuries or illness that caused your loved one’s death
Funeral and burial expenses for your lost loved one
Income compensation if your lost loved one contributed income to the household
Pain and suffering, including emotional and mental anguish caused by the loss of your loved one

A personal injury attorney at our firm can help you establish the monetary value of your losses and understand which types of compensation may be taxed, if any.

Who Is Eligible to File a Wrongful Death Lawsuit?

In Nevada, the decedent’s personal representative or their “intestate heirs” qualify to file a wrongful death lawsuit, per NRS § 41.085. Usually, these heirs are the surviving spouse or children. However, if the decedent didn’t have either, their parents could file. If their parents aren’t alive, the decedent’s siblings may take legal action. Should they not have siblings, the closest surviving relative may file suit.

The Difference Between a Wrongful Death Suit and a Survival Action

When someone passes away due to another person’s negligence, there are two options for pursuing compensation from the at-fault party: a wrongful death lawsuit and a survival action. A wrongful death suit seeks to recover a financial settlement on behalf of the family members who lost a loved one at the hands of the negligent party.

A survival action seeks compensation for the losses the decedent, and by extension, their estate, incurred due to the responsible party’s actions. These claims often occur when the deceased had begun a personal injury lawsuit while they were still alive.

Who Receives a Survival Action Settlement?

A survival action can seek compensation for many of the same expenses, including hospital bills, medical costs, lost income, and pain and suffering. However, rather than going to the decedent’s family members, the settlement goes to the decedent’s estate.

It aims to cover expenses associated with the decedent’s injuries and death. Once all the bills are paid, the remaining balance of the settlement may be disbursed in accordance with the decedent’s will or appropriate court order.

Taxes on a Survival Action Settlement

When you receive a settlement, whether from a survival action or wrongful death lawsuit, you could owe taxes for a portion of your recovery. Ensure that you have your financial obligations covered by speaking with our wrongful death attorney. They can help you understand whether a wrongful death or survival action is appropriate for your case and whether you can expect to pay taxes on your settlement.

Protect Your Legal Right to Compensation After the Loss of a Loved One

If you lost a loved one due to someone else’s negligent or wrongful actions, you usually have two years to file suit, according to NRS § 11.190(4)(e). If you miss this deadline, you could lose your chance for financial recovery. To avoid violating the statute of limitations, an attorney with our firm can guide you through the process and help ensure that you file on time.

There are other advantages to hiring a wrongful death lawyer sooner rather than later. They will need time to gather evidence to support your lawsuit, including medical records, photos and videos of the accident, and witness statements. Evidence tends to degrade over time. Witnesses may forget important details, the accident scene could be altered, and paperwork can get lost. By putting your wrongful death attorney on the case right away, you help ensure that they have access to fresh evidence for your case.

Our Wrongful Death Attorney Can Help You Pursue the Maximum Settlement

Our team understands the difficulties you face after losing a loved one, which is why we dedicate ourselves to making your life easier. If you hire us to take your case, we can:

Gather evidence to establish fault and prove the value of your wrongful death claim
Obtain witness statements and expert opinions to substantiate your wrongful death lawsuit
Negotiate with opposing counsel and insurance representatives to obtain the maximum possible settlement after the loss of a loved one
Help you disburse the settlement so that all bills are paid and any applicable taxes are covered

When you have lost a loved one, the last thing you want to worry about is legal red tape. A Las Vegas wrongful death attorney with our firm can help you sort through the paperwork and secure the financial stability you need.

Our Personal Injury Lawyers Can Determine If Your Wrongful Death Settlement Is Taxable

If you have questions about taxes on your wrongful death settlement, contact for assistance. Our Las Vegas personal injury attorneys can help you navigate the legal complexities, so you understand your legal rights and potential tax obligations after losing a loved one.

I'm an expert in legal matters, particularly in the realm of wrongful death settlements and taxation. With a solid foundation in law and a keen understanding of the intricacies surrounding these cases, I can provide valuable insights.

In the given article from November 22, 2022, the focus is on wrongful death settlements and their tax implications. Let's break down the concepts used:

Wrongful Death Settlements and Taxation:
- The article states that wrongful death settlements are generally non-taxable, according to the Internal Revenue Service (IRS). This exemption is because wrongful death settlements are considered allocations for physical injuries and sickness.
Exceptions to Non-taxable Status:
- The article mentions exceptions where certain portions of the damages might be taxable. These exceptions include:
  - Medical bills taken from the income earned in previous years.
  - Emotional distress if not directly related to the accident-related injury or illness.
  - Punitive damages.
Determining Tax Liability:
- The article emphasizes the role of a wrongful death lawyer, specifically those at De Castroverde Accident & Injury Lawyers, who can evaluate a claim and explain tax obligations. The lawyer can determine if any part of the settlement might be subject to IRS taxation.
Components of Wrongful Death Cases:
- Wrongful death cases allow surviving family members to seek compensation for various losses, including:
  - Hospital bills and medical expenses.
  - Funeral and burial expenses.
  - Income compensation.
  - Pain and suffering (emotional and mental anguish).
Eligibility to File a Wrongful Death Lawsuit:
- In Nevada, the decedent’s personal representative or their "intestate heirs" are eligible to file a wrongful death lawsuit. This typically includes surviving spouses, children, parents, and siblings.
Difference Between Wrongful Death Suit and Survival Action:
- The article explains the two options for pursuing compensation: a wrongful death lawsuit and a survival action. The former seeks compensation on behalf of family members, while the latter seeks compensation for losses incurred by the decedent's estate.
Taxes on Survival Action Settlements:
- It's highlighted that settlements, whether from a survival action or wrongful death lawsuit, may be subject to taxes. A wrongful death attorney can assist in understanding the tax implications.
Statute of Limitations:
- There is a mention of the two-year deadline (NRS § 11.190(4)(e)) to file a wrongful death lawsuit in Nevada, emphasizing the importance of acting within this timeframe to avoid losing the chance for financial recovery.
Benefits of Timely Legal Action:
- The article advises on the advantages of hiring a wrongful death lawyer promptly, including the gathering of fresh evidence, which tends to degrade over time.
Role of a Wrongful Death Attorney:
- The article concludes by highlighting the role of a wrongful death attorney in gathering evidence, negotiating settlements, and ensuring proper disbursem*nt of settlements.

In summary, the article provides a comprehensive overview of wrongful death settlements, taxation considerations, eligibility to file lawsuits, and the importance of legal representation in navigating these complex matters. If you have further questions or need assistance with taxes on a wrongful death settlement, the article suggests contacting the firm's Las Vegas personal injury attorneys.