Your family may receive financial damages after a fatal accident in Alabama. Many families wonder if wrongful death lawsuit settlements are taxable in Alabama. The Internal Revenue Service (IRS) does not typically tax wrongful death payments in Alabama.
Alabama only awards punitive damages for wrongful death claims. In most cases, the IRS taxes punitive damages, but the agency makes an exception for Alabama due to the state’s laws.
Learn more about these laws with a Birmingham wrongful death lawyer from our team at Heninger Garrison Davis, LLC. Call or complete our online contact form to get answers to your questions.
Does the IRS Tax Wrongful Death Lawsuit Settlements in Alabama?
The IRS does not tax wrongful death lawsuit settlements in Alabama, even though the organization typically taxes punitive damages.
The IRS has many rules regarding tax implications of settlements and judgments and makes an exception for states like Alabama that restrict the funds available to families after a fatal accident.
An attorney can provide more information about the federal tax implications of an Alablama wrongful death claim.
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What Compensation do You Get for an Alabama Wrongful Death Claim?
Alabama only allows families to receive punitive damages after a fatal accident. The state expects your family to use these funds to cover any financial strain caused by a deadly accident, including your loved one’s funeral or burial costs.
Punitive damages serve as a way to punish the individual at fault for a deadly accident.
Does Alabama Limit Wrongful Death Damages?
Alabama generally caps punitive damages for legal claims. However, the state makes an exception for wrongful death cases and does not apply a cap to these claims. You can discuss the potential funds available to your family with your attorney.
How do You Secure a Wrongful Death Settlement?
Who can file a wrongful death lawsuit in Alabama to secure damages to cover the financial losses suffered by your family? Alabama requires a personal representative for the deceased to file these claims in most cases.
Your loved one may set a personal representative in a will or another legal document. If your loved one didn’t name anyone to fulfill this role, the court system can assign a personal representative on their behalf.
Note that Alabama allows a parent to file a wrongful death claim after the loss of a minor child (defined as a child under the age of 19). However, parents only have six months to file this claim. After six months, a personal representative must handle the claim.
Can a Lawyer Help with a Wrongful Death Lawsuit?
An attorney can assist your family with all aspects of the legal process after a deadly accident. For example, your lawyer may help after a fatal:
- Truck accident
- Bicycle accident
- Car accident
- Act of nursing home abuse or neglect
- Act of medical malpractice
- Accident caused by a defective product
Your lawyer will explain all your legal options and compassionately answer any questions you have throughout the process, including any regarding wrongful death lawsuit settlement taxation in Alabama, so that you can regain your peace of mind.
Lawyers can deal with insurance companies and the at-fault party, giving you more time to spend with your family. A law firm can investigate the causes of the accident and review the full effects of the loss on your family.
Your attorney will use the information they collect to convey the full losses you experienced, using this information to push for punitive damages that can cover all the financial strain you experience.
You can also review our FAQ on wrongful death lawsuits in Alabama for additional information.
How Long Will a Wrongful Death Claim Take?
It can take a significant amount of time to resolve a wrongful death claim in Alabama. In many cases, these claims take over a year to conclude, especially if your family goes to court against the at-fault party.
Your lawyer will keep your claim on track and provide you with up-to-date information about any changes throughout the legal process.
Will a Lawyer Charge to Handle a Wrongful Death Claim?
Wrongful death settlements aren’t taxable in Alabama, but your family will have to pay a lawyer for their services after they resolve your claim. Lawyers in Alabama take on these cases on a contingency fee basis, so you’ll only pay legal fees at the end of your claim.
You can discuss the specifics of pricing when you reach out to a firm for a risk-free consultation.
Discuss the Taxation of Wrongful Death Lawsuit Settlements with a Lawyer
Are wrongful death lawsuit settlements taxable in Alabama? The IRS has decided not to tax these settlements even though they contain punitive damages. You can learn more about these regulations and build a claim today with our team at Heninger Garrison Davis, LLC.
You can call or complete our online contact form to get more information about an Alabama wrongful death case.
