Are Wrongful Death Settlements Taxable in Georgia?

The Internal Revenue Service (IRS) states that a settlement for wrongful death is not regarded as taxable income. The IRS adds that while all income is subject to taxation, there are some exclusions made for benefits paid out in cases of wrongful death and personal injury compensation.

Nevertheless, based on your particular circumstances, there can be other elements that have an impact on taxes. In addition to assisting you in seeking restitution for your losses, a Georgia wrongful death lawyer from John Foy & Associates can direct you to a financial advisor for detailed tax advice.

What Is a Wrongful Death Settlement? 

A wrongful death settlement is an agreement that resolves a disagreement and leads to the voluntary dismissal of any associated litigation, just like any other settlement in court cases.  Parties frequently opt to keep their settlement agreements confidential, regardless of the specifics.

Depending on the specifics of the case, the typical settlement amount for a wrongful death claim can vary greatly. Using the particulars of the victim’s life and the circumstances of the death, compensation is decided on a case-by-case basis.

However, because the effects are frequently catastrophic for surviving family members, wrongful death compensation is frequently higher. Tens of thousands of dollars to millions of dollars can be involved. These sums are frequently given out as a structured settlement, which provides the victim’s family with a consistent flow of money.

How Is a Wrongful Death Settlement Calculated?

It is extremely challenging to put a monetary value on a person’s life. To determine a fair price that adequately compensates the surviving family members for their losses, a number of criteria could be taken into account. These consist of:

• Age and financial situation of the deceased person’s dependents
• costs related to the deceased
• Income of the deceased at the time of death
• The circumstances of the death (such as intentional injury or medical misconduct)
• The deceased person’s age
• The health of the deceased
• The income of the deceased
• the training and education of the deceased
• The value of the benefits that were lost (pension and health insurance)

Damage claims must include explicit dollar numbers that are backed up by proof, not just an estimate. To decide a fair sum, economists, other expert witnesses, and a wrongful death attorney can examine the circumstances surrounding the deceased person’s wrongful death and take all relevant aspects into account when negotiating a settlement.

Who Can File a Wrongful Death Case in Georgia?

A wrongful death claim in Georgia may be made by the surviving spouse, child, or parent of a deceased victim in accordance with OCGA §51-4-2 of the Official Code of Georgia Annotated (OCGA). An action for wrongful death, a sort of legal litigation in which families can seek compensation for the loss of a loved one, may only be brought in specified situations.

A wrongful death is one that was brought on by the negligence or willful misconduct of another. Therefore, in order for families to bring wrongful death claims, the victim must have died as a result of another party’s wrongdoing. A third party may apply to the court to be named the victim’s personal representative if the deceased lacked a surviving spouse, child, or parent to bring a wrongful death claim on their behalf.

To proceed with a wrongful death claim, the personal representative, also known as the executor, must be at least 18 years old, of sound mind, and officially appointed by a probate court, which deals with all issues related to the administration of estates after a person’s death. The administration of a loved one’s estate can be a time-consuming and challenging process, but a lawyer can assist you in pursuing your wrongful death claim so you can concentrate on other estate administration responsibilities.

Who Receives the Money from a Wrongful Death Settlement in Georgia?

Georgia law distinguishes clearly between people who may file a wrongful death claim and those who may be awarded damages for wrongful death. Typically, even if they are not eligible to file a wrongful death claim, certain family members will be entitled to a portion of the compensation.

Children of the victim will share in the recovery of wrongful death compensation even if they are not permitted to file the claim. The Georgia Code stipulates in Section 51-4-2(d)(1) that a wrongful death settlement “shall be equally divided, share and share alike, among the surviving spouse and the children per capita, and the descendants of children shall take per stirpes.”

This means that the surviving spouse and the children will be the first entitled to the wrongful death settlement, and should they pass, then the descendants of those children shall inherit the settlement money.

Is the Payout from a Wrongful Death Settlement Taxable? 

The IRS has stated that only income is taxable and has listed what is considered income for tax purposes. Settlements from wrongful death lawsuits are not taxable, according to the Internal Revenue Service (IRS), because they are not regarded as sources of income. Because the IRS classifies wrongful death settlements as claims originating from illness and personal injury, they are exempt from taxation.

However, there are certain circumstances where a portion of the settlement may be taxable. The issue of whether or not these settlements are taxed depends on a number of factors. The IRS may tax your settlement amounts in certain circumstances, including:

• The IRS may take money out of your settlement if a court grants punitive damages.
• The IRS may deduct money from your final settlement if you got a portion of it in prior years to cover the deceased’s medical expenses.
• The IRS may deduct money from your final wrongful death lawsuit settlement if they find that the emotional distress you experienced and for which you were compensated was not caused by a personal injury or sickness.

You might wish to speak with a wrongful death attorney to gain a better grasp of how each component of your settlement is classified and taxed.

Hiring a Wrongful Death Attorney

In Georgia, John Foy & Associates has been managing wrongful death cases for more than 20 years. Our team of experienced wrongful death attorneys can aid when your family needs assistance with pursuing compensation and can handle every stage of your claim.

We offer all clients a free consultation to go through the specifics of your case. We operate on a contingency basis if you determine that we are a good fit for your family. Until we secure the financial support your family requires, you owe us nothing.

Call our office or complete the free case evaluation form on our contact page to arrange a meeting with one of our attorneys.