BlogUncategorizedStructured Settlements And Wrongful Death

Structured Settlements And Wrongful Death

accidental death settlement

The grief of losing a loved one unexpectedly is painfully exacerbated when their death is caused by another party’s negligence or misconduct. The emotional devastation of a wrongful death is frequently compounded by severe financial struggles for the surviving family members. Structured settlements can provide firm stability and support for grieving families facing financial uncertainty after a tragic loss!

A structured settlement provides compensation for a wrongful death through regular payments over many years rather than in a single lump sum. Structured settlements aim to guarantee a steady income that can help families get back on their feet financially while they process their grief. For those facing the hardship of an unexpected funeral, long medical bills, and loss of their loved one’s income, a wrongful death settlement can offer reassurance when it is needed most.

This article will explore how wrongful death settlements work, outline the significant benefits they provide for wrongful death cases, and offer guidance for those considering entering into a structured settlement agreement after losing a loved one.

Types Of Wrongful Death Cases

A wrongful death occurs when a person is killed due to intentional harm or negligence caused by another party. Some common examples of wrongful deaths include:

  • Workplace accidents due to safety violations
  • Medical malpractice such as surgical errors
  • Car accidents caused by drunk or reckless drivers
  • Nursing home abuse or neglect
  • Defective products causing fatal injuries

The impact of an unexpected death on a family cannot be overstated. In addition to the devastating emotional effects like trauma, grief, and depression, many families also struggle enormously on a financial level.

Funeral and medical expenses arise rapidly, household income is suddenly lost if the deceased was a breadwinner, and the family’s overall financial stability is jeopardized.

To hold the negligent parties accountable and receive compensation for their loss, family members can file a wrongful death claim. If successful, the suit can result in the at-fault parties paying a substantial settlement, including coverage of the medical and funeral bills for the deceased and significant compensation for the surviving family members. This is where structured settlements come in.

How Do Structured Settlements Work?

With a structured settlement, the compensation amount is paid out through periodic payments over many years rather than in one lump sum payment. This provides a stable continuity of income for the bereaved family members or the surviving spouse, stretched out over time to provide lasting financial compensation.

Structured settlements are commonly funded by annuities, which are insurance products that offer periodic payments with tax advantages. The defendant purchases an annuity, usually through their insurance company, that is customized to the payment schedule agreed upon in the settlement. An annuity removes volatility and guarantees consistent payments regardless of market fluctuations or changes in the insurer’s financial status.

accidental death settlement

Payments are made on a set schedule, typically monthly or annually, tailored to the family’s financial needs and situation. These payments will continue reliably for the duration of the term outlined in the structured settlement agreement, which may range from several years up to the lifetime of the beneficiaries.

Structured settlements have to abide by strict requirements at both federal and state levels to ensure fairness and prevent misuse. For example, structured settlement agreements cannot contravene court orders or dispute resolutions. They also cannot require any upfront payments or fees from the settlement recipients.

The Benefits of Structured Settlements In A Wrongful Death Lawsuit

Structured settlements offer numerous advantages that make them an appealing approach for both plaintiffs and defendants in wrongful death claims. The periodic payment model provides stability and security to grieving families when they need it most.

Steady Financial Support

The defining benefit of a structured settlement is providing steady income through predictable installments spread out over the years. This gives families ongoing financial support while they struggle with the initial expenses and consequences of an unexpected death. Regular structured payments act as a Lifeline that helps cover regular living expenses, prevents debt accumulation, and aids the healing process.

Continued Income Replacement

Structured payment schedules aim to replicate the deceased breadwinner’s income over the long run. This income replacement delivers financial continuity and helps surviving family members avoid destitution. If the deceased was funding a household or covering critical recurring costs, a backloaded structured settlement goes a long way to fill that economic void.

Payment Flexibility

Structured settlements allow flexible payment terms tailored to the plaintiffs’ needs. Schedules can consist of monthly or annual installments or incorporate milestone payments for major life events. For example, a structured settlement benefiting a child can allocate designated amounts for college tuition when the time comes.

Tax Advantages

Structured settlement payments enjoy favorable tax treatment under federal law. The ongoing installments are income tax-free to recipients as long as the structured settlement complies with IRS requirements. This perk helps money go further compared to investment returns that would be subject to taxes.

Avoid Risks of Lump Sum Mismanagement

Research shows that those unfamiliar with managing large sums of money tend to make grave financial errors that drain settlement funds rapidly. Structured settlements mitigate such risks by spreading funds out gradually rather than in a single lump sum. This constraint promotes long-term financial stability.

Factors To Discuss With Your Wrongful Death Lawyer!

Despite their merits, structured settlements have some drawbacks to weigh. And even when you decide to pursue a structured settlement, crafting the optimal payment terms deserves careful consideration. Make sure to mention these factors in your discussions with an unbiased financial advisor, like Fairfield Funding!

Schedule of Payments

Choosing the right schedule of payments takes some analysis of current expenses and future income needs. You want adequate upfront funding to handle sudden costs combined with longer-term disbursements to provide lasting security. Financial experts can forecast future cash flow requirements from the settlement so payments align smoothly.

Liquidity Constraints

Compared to lump sums, structured settlements limit liquidity because funds get locked into an ongoing payment obligation. This can prevent tapping money to fund a business, purchase a home, or pay off high-interest debt. Plaintiffs should think critically about tying up settlement funds versus retaining flexibility or investing for growth.

Duration and Guarantees

Settlement terms should guarantee full payouts covering the life expectancies of recipients, especially minors and young survivors. Provisions for continued payments if beneficiaries pass away prematurely are also critical. Annuities backstopping structured settlements typically deliver reliable lifetime income without the risk of reduced payment duration.

Protections Against Default

Though rare, some annuities funding structured settlements have faltered, putting payments in jeopardy. State laws require defendants to take measures preventing settlement default, like purchasing annuities from highly rated insurance carriers or establishing backup guarantee funds. Requiring these structural safeguards is key.

Impact on Public Benefits

For low-income plaintiffs dependent on needs-based government assistance, structured settlements can affect eligibility if not set up prudently. Since installment amounts often count as income, they could trigger aid reductions. But financial tools like special needs trusts can shelter structured settlements from public benefits calculations.

Rate of Return

Conservative fixed return vehicles like annuities fund most structured settlements. So recipients forfeit upside investment potential for guaranteed income. Plaintiffs should assess if lump sums carefully invested could outearn annuity-backed payments over the long run. Historical market returns suggest it’s quite possible.

Finding the Right Structured Settlement Partner!

Choosing a reputable structured settlement company is imperative to ensure the stressful process goes smoothly for a bereaved family. Check for credentials like membership in the National Structured Settlements Trade Association and certification from the Certified Structured Settlement Consultant program. Customer reviews for companies should demonstrate high ethical standards and professional, compassionate service.

Beware of any company trying to pressure you into an agreement before you are ready or attempting to charge upfront fees, which is prohibited. Only work with a structured settlement partner willing to patiently guide you through considerations around payment schedules, tax implications, and long-term security to craft a plan serving your best interests. The right partner will remain available to answer any questions and address concerns if they arise during the payout period.


The crushing grief and hardship from losing a loved one unexpectedly should not be compounded by financial instability and uncertainty. Structured settlements empower families impacted by wrongful death to honor their loved ones with less worry over bills and expenses in the years ahead. As opposed to lump sums that quickly dissipate, structured settlements take an insurance-like approach that focuses more on reassuring long-term reliability. This makes structured settlements a fitting way to ensure stability and deliver justice to those suffering from another party’s devastating negligence!

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