Structured Settlements: Fatalities

Structured Settlements: Fatalities

Second in a series of blog posts dedicated to helping clients decide when a structured settlement should be considered

Today’s Installment: Fatalities

May 7, 2019 – “Death is a crisis that all families encounter, and it is recognized as the most stressful life event families face . . .”

The preceding quote was excerpted from Chapter 4, “Death, Dying, and Grief in Families” (Murray, Toth & Clinkenbeard, 2005), of Families & Change: Coping with Stressful Events and Transitions, a best-selling text of compilation scholarly research on a topic most of us would sooner avoid.

No death can be minimized, but the unexpected, sudden death of a loved one leaves families feeling especially violated as they struggle for comfort that is too slow in arriving and acceptance of a new reality they never asked for.

The ensuing grief takes a significant emotional toll on psyches and many families fracture to the point of permanent dysfunction as a result.

When survivors file insurance claims and wrongful death lawsuits due to negligence alleged to have caused a fatality, they experience a new set of stressors inherent in the litigation process which can prolong their suffering and worsen their already-fragile sense of being.

And that’s just the emotional toll.

Why Structured Settlements for Fatalities?

When the decedent was the family’s contributory wage earner, the loss of their steady income adds yet another layer of vexing complexity to the survivor responsible for keeping the family together.

Life insurance will help, but the ongoing cost of raising a family, particularly when young children are left behind, can remain long after life insurance proceeds are spent.

Few cases cry out for structured settlements as loudly as those involving fatalities. Especially when a principal wage earner leaves small children behind.

Because a structured settlement can be crafted to replicate lost future income, structuring that portion of the claim serves the family better than a single lump sum of cash ever could. It stabilizes their financial situation and eliminates daunting decision making.

In fact, an argument can be made that attorneys and claims associates do the family a grave disservice when they don’t structure the settlement. Given the unpredictability of the stock market and most people’s inexperience in managing large sums of money effectively, a lump sum simply fails to adequately meet the needs of the family over time.

Structured settlements offer secure, guaranteed, tax-free future income at rates superior to anything else of commensurate risk.

No other investment strategy can legitimately make a similar claim.

In Addition to Wage Loss

Structuring the decedent’s wage loss to help ease the financial stress for surviving family members should be considered the minimum “do the right thing” moment when resolving a wrongful death claim.

And because, unlike wages, structured settlement benefits flow 100% income tax-free for wrongful death claims, net income can be replaced for less money than would be possible absent the structured settlement.

In addition to lost wages through the date of retirement, the decedent likely would have still been earning pension credits or contributing to Social Security and/or a defined benefit retirement plan. For this reason, many structured settlement plans include spousal income for life to help make up the shortfall.

Also, reserving some general damage funds for the kids’ college education is often a sensible component of any litigation outcome. Especially if the case requires court approval, attorneys will find that structured settlements make for a better end result on minors’ cases and help ensure a smooth court approval process. (See Structured Settlements; Minors)

Idea: When a child is lost, we’ve even seen families structure annual scholarship funds as a way to help keep their offspring’s memory alive.

An annual contribution to MADD, the high school wrestling team or charity of the family’s choice ensures a continuing legacy versus a single lump sum which can be forgotten after a one-time donation is made.¬†

Predator protection

Another advantage of structuring wrongful death claims is the protection it affords the surviving spouse and children.

Some widows/widowers inadvisably jump into new marriages before they are emotionally ready. Some become easy targets for “Dirty Johns” who troll the obituaries looking for vulnerable prey and newfound benefactors.

Structured settlement contracts established prior to the new marriage remain premarital property generally exempt from divorce settlement consideration should the new marriage eventually sour.

While it’s true cash personal injury settlements would also be considered premarital property, it’s much easier to lose track of those assets if commingled with other funds or purchases.


Sudden death is hard enough to deal with emotionally without added financial stress. Structured settlements can’t bring a loved one back to life. But they can help ensure the financial aspects of dealing with grief are eased and should be strongly considered on wrongful death claims.

Recommended reading and additional resource:

“Surviving Sudden Loss: Stories from those who have lived it”

Collected personal accounts of people who have lost loved ones unexpectedly through air disasters, 9/11, SIDS, and auto and construction accidents. Written by friend of our firm, Heidi Snow, whose fiancé died in the TWA Flight 800 crash off Long Island in 1996 and whose grief mentoring nonprofit helps those who are left behind in the wake of air disasters.

Photo by dylan nolte on Unsplash
Finn Financial Group