Losing a loved one can be difficult for the survivors, primarily if the death occurred because of someone else’s negligence, carelessness, or malicious behavior. If you have lost a loved one this way and received a settlement from a wrongful death lawsuit, you may wonder if the settlement is subject to taxes.
As indicated by the Internal Revenue Service (IRS), settlements for wrongful deaths are not taxable. Claims for illnesses and injuries are seen as a portion of the claim. Understanding how the tax laws concerning a wrongful death settlement can help survivors ensure that the money they were awarded will last as long as possible.
Understanding Wrongful Death Settlements and How Tax Laws Apply
Some specific circumstances can make the settlements associated with wrongful death suits and their taxability confusing. The IRS does not recognize wrongful death settlements as taxable. But, they can tax other portions of the settlement, some of these are listed below:
- You may be taxed on the amount of the compensation received for medical costs and other expenses that your income was used to cover in previous years.
- If you received money for emotional anguish, and the distress was not a result of the injury or illness, this may be considered taxable.
- If punitive damages were awarded from a wrongful death lawsuit or a settlement from the insurance company, the money might be taxed.
Your wrongful death lawyer can help you determine how all areas of your reimbursement are classified and how your compensation will be affected by taxes.
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Wrongful Death Loss Assignments
Courts assign different areas of the wrongful death claims in various ways that may affect its taxability following a wrongful death settlement. The IRS will not tax compensatory damages, but punitive damages are available to be taxed.
Here are some of the following damages you might be awarded. You may want to speak to your wrongful death lawyer about how the settlement should be organized so that you face the least tax implications:
- Loss of economic help due to the wrongful death of your family member
- Loss of the forthcoming monetary assistance that would have likely been made by your valued family member.
- Services and loss of support around the house that the person you care for once contributed
- Loss of companionship often occurs when a husband or wife is the victim of the wrongful death
- Emotional anguish and mental distress due to the death of a loved one
- Money spent on burial expenses and funeral costs of your family member.
Courts do not often grant punitive damages in wrongful death cases. When they do, it is to punish the defendant and deter such behavior from happening again. Punitive damages, if awarded, are considered taxable.
Survivors Are Eligible to File Claims
If a family member dies because of another person’s reckless or negligent actions, the surviving family members may decide to pursue a wrongful death lawsuit. In Oklahoma, the personal representative of the decedent’s estate is the only person eligible to file a wrongful death claim.
If the decedent had a will, the personal representative would likely be named in that document. If there is no will, the personal representative will be appointed by the court. While the personal representative is the only person entitled to file the wrongful death lawsuit, the action can be done on behalf of the surviving dependents and any heirs of the decedent, such as those listed here:
- Other people who can show they are entitled to inherit from the decedent via intestate succession
Though the personal representative may file a wrongful death lawsuit when the reckless action of someone else causes their loved one’s death, not every person who is in a familial relationship with the decedent is eligible to receive financial restitution for the wrongful death.
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Protecting Your Power to File Suit for a Wrongful Death
When filing a wrongful death suit, it is important to plan. Having a wrongful death attorney in Oklahoma can help you in various ways. Some of the things that you can expect are as follows:
- Gathering of evidence to prove your loved one’s death was caused by negligence or deliberate, willful misconduct.
- Witnesses are identified, located, and interviewed.
- Medical records are reviewed
- Depositions are scheduled
Your lawyer can take the time to perform the actions listed above while you heal physically and emotionally. Leaving the challenging process of assembling a case and a strategy to an experienced attorney can grant you peace of mind so you can focus on getting better.
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Statute of Limitations on Oklahoma Wrongful Death Claims
The statute of limitations on wrongful death cases in Oklahoma requires the personal representative of the decedent’s estate to file a wrongful death lawsuit within two years from the date of their loved one’s death.
In other states, the time limits may vary. Your attorney could explain the timeline if the death of your loved one did not happen in Oklahoma. It is important that you have filed a suit before the statute of limitations runs out. If that does not happen, you may forfeit your claim for all damages.
Another essential thing to note when deciding when to file is the evidence. To preserve the evidence and make sure that all the witnesses are spoken to when the evidence is still fresh in their minds, it is best to file as soon as possible.
Maximizing Your Wrongful Death Settlement
If your wrongful death lawsuit is resolved successfully, you may receive significant financial compensation. Though financial restitution does not replace the loss of your beloved family member, it can help to replace their income and the support they provided your family. Understanding how the tax laws may affect your settlement is crucial to retaining as much of it as possible.
Speak to an experienced attorney with BDIW Law to ensure that as much of your wrongful death settlement as possible is protected from being heavily taxed. Our team wants to ensure that you benefit from the compensation you receive.
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