Losing a loved one is devastating, and dealing with financial and legal matters afterward can feel overwhelming. If you’re receiving a wrongful death settlement, understanding whether it’s taxable is an important step. As a Metairie wrongful death lawyer, I know in most cases, the settlement is designed to help ease your family’s burden, not create more challenges.
Which Parts of a Settlement Are Non-Taxable?
In general, the main parts of a wrongful death settlement are not taxable. This includes compensation for:
- Pain and Suffering: Payments meant to address emotional distress and loss.
- Physical Injuries or Illness: If your loved one experienced physical harm, the settlement for those injuries is usually excluded from taxable income.
These payments are treated as a way to make up for what your family has lost, not as income.
Are Any Parts Taxable?
Some parts of a settlement might be taxable, depending on the details of your case:
- Punitive Damages: If part of the settlement is meant to punish the wrongdoer rather than compensate your family, that portion may be taxable.
- Interest: If the settlement earns interest before it’s paid out, that interest can be taxed.
What Should You Do?
It’s a good idea to consult with a tax professional or a Louisiana wrongful death lawyer. They can explain how taxes might apply to your settlement and help protect as much of it as possible for your family.
Being informed about these details can help you plan ahead and focus on rebuilding after your loss.
If you need help with a wrongful death claim or survival action, call us at 985-240-9773.
