Structured Settlements And Wrongful Death

When a loved one tragically loses their life due to the negligent or wrongful actions of another party, surviving family members can pursue a wrongful death lawsuit to receive monetary damages. Rather than a single lump sum payment, these damages are commonly paid out through a structured settlement arrangement.

In a structured settlement, the compensation is paid out as scheduled future installments rather than a lump sum.

What is a Wrongful Death Settlement?

When someone dies due to another person’s negligence or wrongdoing, their surviving family members may be able to receive financial compensation through a wrongful death settlement. This is a legal agreement with the at-fault party or their insurance company.The purpose of a wrongful death settlement money is to compensate the family for the financial hardships and emotional losses caused by the untimely death of their loved one. The compensation aims to cover damages like:

Medical expenses incurred before the death
Funeral and burial expenses
Loss of future income and benefits
Loss of companionship and support
Pain and suffering endured by the deceased before their death

The settlement amount can vary greatly depending on the circumstances of the case, the age of the deceased, and their earning potential.

Examples Of A Wrongful Death

Wrongful death claims can arise from many different types of incidents involving negligence or wrongful acts that cause a fatality. Some common examples include:

Vehicle accidents (from a Car accident to even a pedestrian accident) caused by negligent driving behaviors like speeding, drunk driving, distracted driving, etc.
Medical malpractice cases where a preventable error by healthcare providers leads to a patient’s death.
Workplace accidents resulting from safety violations, faulty equipment, or hazardous conditions on the job.
Incidents involving defective products like automotive defects, dangerous toys, faulty medical devices, etc.
Fatal injuries occurring due to a property owner’s failure to keep premises reasonably safe and free of hazards.
Intentional criminal acts like assault, drunk driving accidents, or even murder in some cases.

No matter the specific circumstances, if a person’s death was directly caused by someone else’s negligence or wrongful conduct, the surviving family members may have grounds to pursue a wrongful death lawsuit against the liable parties to receive compensation for their loss.

Who Can File a Wrongful Death Claim?

The eligibility to file a wrongful death lawsuit varies from state to state, but generally only certain close family members are allowed to bring such a claim after a loved one’s death.

Immediate Family Members

In most states, the following immediate family members have the primary right to file a wrongful death suit:

Surviving Spouse/Domestic Partner
Children (both minor and adult) of the deceased
Parents of the deceased (if deceased had no spouse/children)

If the deceased was married, the surviving spouse is typically given the highest priority to pursue a wrongful death claim. Some states also allow legal same-sex or domestic partners to file.

Other Potential Claimants

Depending on the state’s laws, others who may be able to file a wrongful death suit in certain circumstances include:

Putative Spouses (those who had a good faith belief they were married)
Life Partners or Financial Dependents
Distant Family Members (siblings, grandparents, etc.)
Court-Appointed Representatives/Executors of the Estate

However, the ability of these parties to file will depend on the specific statute in that state and whether closer family members exist.

Can Multiple Parties Claim A Wrongful Death?

Most states will only allow a single wrongful death lawsuit to be filed against the deceased victim in cases where multiple parties are eligible. If multiple claims are submitted, the court will likely consolidate them into one case and determine the appropriate party to lead the lawsuit based on their close relationship with the decedent.

The laws determining who qualifies as a proper plaintiff in a wrongful death action aim to provide compensation to the deceased’s closest surviving family members and those most directly impacted financially by the loss of life. An experienced wrongful death attorney can evaluate your specific situation and determine if you have a valid claim.

What Are Structured Settlements For Wrongful Death?

When a wrongful death suit is settled, the surviving family members may receive the compensation in one of two ways: a lump sum payment or a structured settlement. A structured settlement or a structured settlement annuity is an arrangement in which the settlement amount is paid out over a specified period rather than in one large sum. Below, we’ve elaborated on how structured wrongful death settlements are paid.

How Do Structured Settlements Work?

In a structured settlement, the defendant or their insurance company purchases an annuity from a life insurance company. This annuity is then used to make periodic payments to the surviving family members over a set number of years or for the remainder of their lives. The structured settlement terms, including the payment amount and frequency, are negotiated during the settlement process.

Benefits of Structured Settlements in Wrongful Death Cases

There are several advantages to choosing a structured settlement in a wrongful death case:

Guaranteed long-term financial security: Structured settlements provide a steady income stream, ensuring that the family’s financial needs are met for years to come.
Protection from mismanagement: Receiving a large sum of money at once can be overwhelming, and there is a risk that the funds may be mismanaged or depleted quickly. Therefore, a structured settlement helps to prevent this by providing a consistent income stream.
Tax advantages: Structured settlement payments are generally tax-free, whereas the interest earned on a lump sum payment may be subject to taxation.
Customizable payment plans: The terms of a structured settlement can be tailored to meet the unique needs of each family, taking into account factors such as age, health, and future expenses.

Potential Drawbacks of Structured Settlements

While structured settlements offer many benefits, there are also some potential disadvantages to consider:

Lack of flexibility: Once the terms of the structured settlement are established, it can be difficult to modify them if circumstances change.
Potential for insufficient funds: If the family’s financial needs increase over time, the structured settlement payments may not be enough to cover these additional expenses.
Lower rate of return: The interest earned on a structured settlement may be lower than what could be earned by investing in a lump sum payment, depending on market conditions.

How To Evaluate the Value of a Wrongful Death Settlement?

When negotiating a structured settlement in a wrongful death case, there are several factors to consider:

Factors to Consider

The age and life expectancy of the beneficiaries
The family’s current and future financial needs
Inflation and cost-of-living adjustments

The Role of Attorneys and Financial Advisors

Navigating the complexities of a structured settlement can be challenging, which is why it’s crucial to work with an experienced wrongful death attorney and a trusted financial advisor. They can help:

Negotiate the terms of the settlement to ensure that the family’s needs are met
Determine the appropriate settlement amount based on the specific circumstances of the case
Evaluate the potential tax implications of the settlement
Choose a reputable structured settlement company to manage the annuity

Court Approval of Structured Settlement Agreements

In many states, structured settlement agreements in wrongful death cases must be approved by a court. This helps to ensure that the terms of the settlement are fair and in the best interests of the beneficiaries.

Alternatives to Structured Settlements

While structured settlements can be an excellent option for many families, they may not be the right choice for everyone. Some alternatives to structured settlements include:

Lump Sum Payments

Receiving a settlement amount in one lump sum can provide more flexibility and control over how the funds are used. However, it also comes with the risk of mismanagement and potential tax implications.

Trusts

Establishing a trust can help manage settlement funds and ensure that they are used for their intended purposes. Trusts can be structured to provide periodic payments, similar to a structured settlement, while also offering more flexibility and control.

Annuities

Purchasing an annuity with a portion of the settlement funds can provide a guaranteed income stream, much like a structured settlement. However, annuities purchased outside of a structured settlement may not offer the same tax benefits and protections.

Managing a Wrongful Death Settlement

Regardless of whether you choose a structured settlement or another option, managing a wrongful death settlement can be a daunting task. Here are some tips to help you navigate the process:

Seek Professional Advice

Working with an experienced wrongful death attorney and a financial advisor can help you make informed decisions about how to manage the settlement funds.

Create a Budget

Establishing a budget can help you ensure that the settlement funds last as long as possible and are used for their intended purposes.

Invest Wisely

If you choose to invest a portion of the settlement funds, it’s essential to do so wisely and with a long-term perspective. Consider working with a financial advisor to develop an investment strategy that aligns with your goals and risk tolerance.

Plan for the Future

Think about your family’s long-term needs, such as education expenses, healthcare costs, and retirement planning. Incorporating these considerations into your settlement management plan can help ensure financial stability for years to come.

The Role of a Wrongful Death Attorney

An experienced wrongful death lawyer or a personal injury lawyer help families navigate the legal and financial complexities of a wrongful death case. They can:

Investigate the circumstances of the death and gather evidence to support the claim
Negotiate with insurance companies and the at-fault party to reach a fair settlement fund.
Represent the family’s interests in court, if necessary
Guide the best way to structure the settlement to meet the family’s needs

When choosing a wrongful death attorney, look for someone with a track record of success in handling similar cases, as well as a deep understanding of the laws governing wrongful death claims in your state.

Bottom Line!

The death of a loved one is never easy, and the added complexity of a wrongful death settlement can be challenging. Structured settlement annuities offer a way to ensure long-term financial stability for surviving family members while also providing some measure of closure and justice.

By working with an experienced wrongful death attorney and carefully considering the options available, families can make informed decisions about how best to manage the financial aftermath of their loss.

Remember, every case is unique. Whether you choose a structured settlement payment, a lump sum payment, or another option, the most important thing is to make a decision that meets your family’s needs and goals. With the right support and guidance, you can find a path forward and honor your loved one’s memory.

FAQs

The Periodic Payment Settlement Act is a federal law that provides tax advantages for structured settlement payments received for physical injury or wrongful death claims. It allows these periodic payments to be 100% income tax-free.

Yes, in addition to wrongful death cases, structured settlements are commonly utilized for catastrophic personal injury cases involving large future medical bills and lost income that need to be compensated over a long period.

Market-based structured settlements allow the injured party or survivors to receive a portion of the settlement as periodic payments funded by annuities while also taking a partial lump sum amount invested in market-based accounts like securities or mutual funds.

Punitive damages awarded to punish the defendant are generally paid in a lump sum and cannot be structured into periodic payments. Only compensatory damages are eligible for structuring.

Bara Goldberg Finance Writer

Bara Goldberg - Amanda Dobanton Esq. is a General Counsel for Fairfield Funding. She has been crucial to the growth of Fairfield Funding for the past 9 years. Prior to Fairfield, she interned at a law firm in Gwinnett County. Ms. Dobanton received a B.S. in History and Political Science from Brenau University and went on to obtain her Juris Doctorate Degree from Atlanta’s John Marshall Law School. Amanda is currently serving on the Board for the National Association of Settlement Purchasers. Amanda is a seasoned expert in the structured settlement and annuity field.

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