Are Wrongful Death Settlements Taxable in California?
Most wrongful death settlements in California are not subject to tax. However, if the party responsible for your loved one’s death acted in a particularly egregious manner, the jury may award punitive damages. Such damages are meant to send a message regarding the consequences of dangerous, reckless behavior. Any punitive damages awarded are taxable.
A Los Angeles wrongful death lawyer at Ellis Injury Law cannot bring your loved one back. However, we can fight for you so that your family member receives justice, and you receive the maximum compensation for your tragic loss.
California earnings tax
In California, taxes are levied on earnings. A wrongful death settlement is not considered earnings under federal law as long as the death was caused by physical injury. Even though the family members filing the wrongful death lawsuit did not suffer a physical injury, federal law exempts them from paying taxes on wrongful death lawsuit compensation as long as the deceased died from a physical injury or illness. The latter refers to negligence in a medical malpractice death due to misdiagnosis.
Wrongful death damages
Non-taxable compensation, or damages, in a wrongful death lawsuit may include:
- The deceased’s final medical bills
- Funeral and burial expenses
- Financial support the deceased would have contributed to the family during their normal life expectancy
- The reasonable value of the deceased’s household services
- Loss of benefits or gifts from the deceased
- Loss of love, companionship, and care
- Loss of guidance and training
Punitive damages are not awarded in most wrongful death cases. In fact, punitive damages are only paid to the victim, not the victim’s family. However, the deceased’s estate may file a survivor action if the victim lived for any amount of time after the incident causing their death. The victim, or their relative or attorney, can make a claim prior to their death. Although the person succumbs to their injuries, their claim survives via the estate.
Only when the act causing the death is extremely malicious would a jury consider awarding punitive damages. These damages aim to do more than punish the entity liable for the death. They also send a message to society that such behavior is intolerable.
A wrongful death attorney knows when the horrific circumstances of someone’s demise may lead to filing a survivorship action for potential punitive damages.
Filing a California wrongful death lawsuit
Only certain family members may file a wrongful death lawsuit. Priority goes to the spouse, domestic partner, or children of the deceased. If the victim did not have these family members, other relatives may file the lawsuit, such as parents or siblings as per the state laws of intestate succession.
Under California’s statute of limitations, a wrongful death lawsuit requires filing within two years of the victim’s death date. If the person died at the scene of the accident, the accident date and death date are the same. If they died from their severe injuries four months later, the statute of limitations is two years from that date.
There is a caveat. If the defendant is any type of public entity, the statute of limitations for filing a claim is just six months from the death date. For example, if the victim was hit and killed by a city bus, a claim requires filing within six months.
Failure to file within the statute of limitations means the claim cannot go forward.
Wrongful death lawyers will ensure all claims are filed promptly, as long as their clients contact them within the permitted period. The sudden and unexpected death of a family member causes great grief, but it is imperative to obtain legal counsel as soon as possible.
Contact a Los Angeles wrongful death lawyer
If your loved one died because of the negligent, reckless, or deliberate actions of another party, contact a compassionate Los Angeles personal injury lawyer at Ellis Injury Law. We offer free, confidential consultations. Call or text us 24/7 or complete our online form to schedule an appointment.
All of our work is performed on a contingency basis, so there is never a fee unless you receive compensation. Our experienced lawyers have recovered more than $350 million for clients in verdicts and settlements.