Is a Wrongful Death Lawsuit Considered Income in California?

It is impossible to prepare for the unexpected loss of a loved one, especially when the loss occurs due to someone else’s negligent or careless act. The consequences of losing a loved one so suddenly can take an emotional toll, as well as a financial one. California allows certain surviving family members to file a wrongful death lawsuit against the at-fault party when their loved one dies as a result of another person’s negligence. You can hold the at-fault party liable for the damages your family suffered after your loved one’s death. 

At The Larsen Firm, we have extensive experience handling wrongful death cases in California. Our team can help answer any questions about your wrongful death claim or your settlement. Some common questions include:

  • What kind of damages can I claim in a wrongful death suit?
  • Is a wrongful death settlement considered income in California?
  • Is a wrongful death settlement taxable?

We are here to answer these questions and any others you may have. Ready to get started? Contact our office today to schedule your free initial consultation and see how our team can help  you.

Damages in a Wrongful Death Claim

In a wrongful death case, the surviving family members receive compensatory damages if they prevail in their claim or enter a settlement agreement before trial. Compensatory damages aim to compensate the surviving family members for the loss of the value of the decedent’s life. Compensatory damages are broad, typically including both economic and non-economic damages. For taxation purposes, compensatory damages are not considered income.

Economic Damages

Economic damages are quantifiable monetary losses suffered by the family as a result of the wrongful death. These are the kinds of damages that can be added up. Economic damages in a wrongful death claim might include:

  • Funeral expenses,
  • Loss of future income,
  • Value of household services provided by the decedent,
  • Loss of gifts or benefits, and
  • Loss of future financial support. 

Wrongful death settlement amounts vary widely based on the individual circumstances of each victim. Thus, it is impossible to predict what a settlement amount might be without a careful analysis of the particular circumstances. One of our wrongful death attorneys can help determine the general value of economic damages you deserve.

Non-Economic Damages

Non-economic damages include intangible losses such as:

  • Loss of love and affection,
  • Loss of moral support, and
  • Lack of guidance from the decedent.

It is often difficult to assign a dollar value to non-economic losses. We can help you with these calculations by consulting with various experts to reach an accurate estimate of your non-economic damages.

Are Compensatory Damages Taxable?

According to the Internal Revenue Service (IRS), portions of a settlement or judgment that are “compensatory” are generally not taxed. Thus, wrongful death settlements and awards in California are not taxable because they do not include punitive damages. However, survival actions can include punitive damages.

What Is a Survival Action?

A wrongful death lawsuit is intended to compensate the surviving family members for their losses associated with the wrongful death. On the other hand, a survival action is a claim brought on behalf of the deceased for medical expenses and lost wages they would have received. A survival action is permitted only when the decedent did not die immediately after the accident. Instead of a family member specified by statute, a survival action is brought by the decedent’s estate. Any award is distributed according to the terms of the decedent’s will. If the decedent did not have a will, it is distributed according to intestacy laws.

Additionally, survival actions can include punitive damages, unlike wrongful death actions.

Punitive Damages

If there is evidence of oppression, fraud, or malice on behalf of the at-fault party, the survival action could result in punitive damages. Punitive damages typically arise only in cases of extreme recklessness or intentional harm. Punitive damages punish the at-fault party for their conduct and deter repetition of such bad behavior. California does not impose a limit on punitive damages.

Our Results in Wrongful Death Cases

At The Larsen Firm, we pride ourselves on being the go-to firm for wrongful death claims in California. We know how to help you calculate your damages, and we can help you locate evidence to establish your losses. Some of our previous settlements testify to our experience in wrongful death lawsuits:

  • $13.6 million jury verdict for the wrongful death of a spouse;
  • $11.7 million award for a traffic wrongful death case;
  • $10.6 million settlement for a death caused by a defective product;
  • $4.5 million for a wrongful death caused by a car accident;
  • $10.8 million for a wrongful death caused by defective tires; and
  • $4 million verdict for the wrongful death of a child.

You can find more wrongful death settlements online. We are committed to securing a settlement offer that fully compensates you for your financial and emotional losses.

The Larsen Firm: Your California Wrongful Death Law Firm

Dealing with the passing of a loved one is never easy, especially when their death was the result of the wrongful or negligent actions of someone else. And while nothing can bring them back or undo the pain you’ve suffered, a wrongful death settlement can be a great start toward moving forward. 

If you have considered pursuing a wrongful death action in California, speak with competent legal counsel as soon as possible. Regardless of whether your case goes to trial or ends in a settlement, having an experienced wrongful death law firm in your corner is often one of the best things you can do to increase your chances of success. We hope we can be that firm for you. 

At The Larsen Firm, we have over a 99% success rate and have helped our many clients recover more than $950 million dollars in valuable compensation. When you’re ready to discuss your case, give us a call for your free consultation and see how we can help fight for you and your rights.

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