Taxation of Wrongful Death Proceeds

Taxation of Wrongful Death Settlement Proceeds

Taxpayers and litigation attorneys often question whether litigation awards or settlements are subject to income tax and federal estate tax. The following are some of the basic rules in this area.

Settlement for Wrongful Death Are Income Tax Free

Settlements for wrongful death are tax-free. Although IRS Publication 4345 does not go into a lot of detail, wrongful death claims fall into the category of compensation for physical injuries. Compensatory damages awarded for wrongful death are always income-tax exempt to the survivors.

Punitive Damages As Part of the Award Are Not Taxable

Although punitive damages are usually taxable, depending on the state law, they may be exempt from income if they are part of a wrongful death claim.

Wrongful Death Claims Are Part of Decedent’s Estate and May Be Subject to Estate Tax

A wrongful death claim is considered property of the decedent’s estate and would be includable for estate tax purposes.

However, due to the federal exemption for estate taxes, unless the estate had substantial other assets, this should not be an issue for the following reasons. For decedents dying in 2021, the federal estate tax exemption is $11,700,000. Therefore, as long as the total value of the decedent’s estate, including the settlement, are below these estate tax thresholds applicable for the year of death, there would be no federal estate tax to be paid.

For state inheritance taxes, the taxation of these wrongful death proceeds depends on the specific state involved. For example, Pennsylvania does not subject such awards to their inheritance tax.

“Steve Fromm is a knowledgeable, ethical, and competent estate and business attorney. I’ve worked with Steve and I have found him to be a gentleman and a true professional.”
Andy Meehan, President, Andrew M Meehan Inc.

Hiring Steven was quite possibly the best decision of my life! Steven took the time to hear every single one of my concerns and address them in an extremely clear, concise and thorough manner. He guided me through the notoriously complicated and stressful process of probate with the utmost of compassion and dedication. Thank you Steven!

- Andrew Gold

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- Brad Gildin

I have always found Steve to be very responsive, accurate and creative in legal matters presented to him. He demonstrates a good business sense. We have collaborated on several highly technical issues over the years. I look forward to our continuing relationship.

- Mike Massa

Steven has been instrumental in helping my partner and I to create a secure and satisfying estate plan, which meets or exceeds all of our wishes and contains contingencies for everything from medical issues to wealth management and living wills. In this process, Steven has also become a friend. If you need Estate Planning, Tax Advice, a Will or a trust, etc., we highly recommend Steven Fromm, Esquire. He will listen and be sensitive to your unique situation.

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Steve is an excellent attorney who has provided help for my family personally for business, tax, and other services for many years. He is extremely knowledgeable and thorough, and is extremely good at explaining legal concepts to me in clear terms understandable to a non-attorney. It is difficult to pick only three attributes above, since Steve’s work meets most if not all of the attributes above.

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Steve is an excellent corporate attorney who has a deep understanding of corporate law, taxes and estate planning. He’s been extremely helpful to me in keeping my many companies and business ventures organized, focused and squeaky clean. He’s very strong in estate planning and wealth preservation as well. Finally, his follow through is air tight and utterly dependable.

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Steve Fromm is a superb lawyer and I highly recommend him! After a terrible experience with a previous lawyer concerning an estate administration, I entered his office feeling very deflated, confused and discouraged. However, I left his office feeling enthusiastic and eager to get down to business. My situation was very unique, I needed his expertise for an array of things and Steve was able to address all of my needs. With a limited timeframe and an extreme amount of obstacles to overcome he worked meticulously, diligently and accomplished extraordinary results. His professionalism is incomparable and I am forever grateful.

- Renice Cox

Steven J. Fromm & Associates, P.C.

4.9

Based on 68 reviews

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Jonathan Wright

22:49 05 Jun 20

I had an unusual tax situation where I needed expert help. Steve was extremely knowledgeable and careful.

Joseph Hearon

20:43 30 May 20

I had the good fortune to choose Steven to handle my mother's estate. He has expertise in many areas of business, but I was primarily interested in settling the estate. From probating the will to recording deeds everything was done quickly and efficiently. He could not have made the process easier. Steven is not only a personable guy, but will readily address any questions or concerns you might have and he will respond quickly.

Allauren Forbes

15:55 23 Apr 20

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17:47 24 Feb 20

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Lori Nanan

21:55 05 Dec 19

Steve has handled all of the details of my father's estate with extreme professionalism, always in a timely manner and most of all with a kindness that goes above and beyond. For 8 years now, he has answered every email quickly and accurately, he has explained concepts that were above my understanding and has been an absolute pleasure to work with in every way. I know I speak for my whole family in recommending Steve.

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21:20 02 Dec 19

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16:52 07 Nov 19

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13:14 30 Oct 19

I highly recommend Mr. Fromm. He recently helped me through a very complicated tax filing for American expats. He is very knowledgeable, thorough and has lots of experience. I couldn't have been happier with the work that he did for me. Thank you.

David Scott

05:27 24 Oct 19

After unsuccessfully reaching out to other tax attorneys and a tax accountant, Steven Fromm responded immediately to my concerns regarding a complex business tax issue. Steven was reassuring and very knowledgeable. He was receptive and engaging while providing clear concise recommendations to resolve this issue. Steven's professionalism and ability to explain matters in a simple, logical way was most reassuring to me. He gave me the answers I needed and I'm confident now that my business tax issue will be successfully resolved. I highly recommend Steven J. Fromm & Associates, P.C. for all your business tax concerns. David Scott

Tara Tucker

02:27 04 Aug 19

I called with a tax law question a few days ago. Mr. Fromm picked up and introduced himself and proceeded to listen to my question and offered me various suggestions so that it could be resolved. I followed his recommendations and was able to resolve the issue within a few days. He was very respectful and patient. I would return if I have further issues in the near and distant future.

Edward Bell

21:06 26 Jun 19

I needed help with my sisters estate and he provided smart and caring advice. I absolutely recommend

John Avery

15:13 11 Jun 19

We had the pleasure of speaking with Mr. Fromm as a consultation. We had previously used an attorney and paid fees, though accomplished nothing. In our short discussion with Mr. Fromm, he clarified our situation and provided a clear path forward. He was candid and frank, while being transparent about the fees and our expectations. My wife is an attorney and very selective and she was quite impressed with Mr. Fromm and would not hesitate to engage him for legal work. We're grateful for his time and glad we had the opportunity for his counsel.

Amie Russell

16:08 28 Nov 18

Steven is very understanding, compassionate, and professional. He listens to what you have to say and gives you the best advice for your situation. I would highly recommend him!

Courtney Boone

20:11 12 Oct 18

Steven was such a great help to me when we lost my mother unexpectedly. I was completely clueless about how to execute her will, but he walked me through every step, even with the difficulty of me being out of state. He helped me with every unexpected bump and curve as we navigated the process. I highly recommend him!

Nicholas Anselmini

16:04 17 Jul 18

I highly recommend Steven Fromm & Associates. My wife and I have used Mr. Fromm's services for the last two years and will continue to do so. He is conscientious, thorough, kind, and professional. We were very lucky to find him - he has been nothing but helpful throughout situations ranging from the mundane to the rather more complicated.

Peter Pappalas

15:25 13 Jun 18

Steven is fantastic and very personable. Supremely attentive to my needs, provided excellent advice and support, and demonstrated incredible knowledge of partnership agreements. In our first consultation he addressed complex issues that may arise down the road and how to keep my interests protected. I highly recommend engaging Steven Fromm as your corporate attorney.

Peter Criswell

20:46 30 May 18

Steve was so helpful! I had a complicated question about settling an estate and Steve talked me through a variety of options. He's extremely knowledgeable and was willing to spend the time needed to help me understand the various actions I could take. In addition, he was friendly and sympathetic. I highly recommend his services.

lindsey kirland

15:35 25 May 18

Very knowledgeable and informative. 5 stars

Justin Justice

16:36 19 Apr 18

THE BEST OF THE BEST!!! After doing hours of research by speaking with attorneys, checking public records, and reading legitimate client reviews, I determined that Steven J. Fromme is the best attorney of his type in the Philadelphia area and one of the finest in the country. My subsequent personal experiences with him further proved my determination. He is not only a talented, knowledgable, honest, world class expert but he sincerely cares about his clients. He is definitely not the typical money-hungry sociopath masquerading as a caring lawyer. Notice that Mr. Fromm has a RARE five-star rating on Yelp, where it is almost impossible to post fake reviews. I have done your homework for you. You cannot surpass Mr Fromm.

Top Choice Home Care

17:42 10 Jan 18

Very professional. Steve really works the best for his clients. I have referred several other businesses and they absolutely love them! I will keep referring others because my experience has been excellent. 5 stars for sure!

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Steven J Fromm & Associates, PC

5.0

Based on 18 Reviews

Ren N.

2022-09-08 09:18:34

Ridiculously professional and kind gentlemen Mr Fromm is, regarding my particular situation. Responds within 24 hrs once you schedule a talk with his...

Ren N.

2021-03-20 13:13:45

Excellent, patient, kind first time consult. Called me up over the weekend right after receiving my message over Yelp to try to help me with my issue. He is...

Nicholas A.

2020-04-23 10:58:09

My Wife and I needed extra help navigating tax treaties for our return and Steven J Fromm and Associates were absolutely amazing. They were always available...

Po-Chen W.

2020-02-25 20:42:39

As a foreigner coming from a common law country, navigating the US tax system is very daunting. To clarify my tax situations between my home country and the...

Bill H.

2019-08-06 07:02:40

Steve is the best! From the first moment I spoke to Steve, I knew this was not your typical lawyer...... he was honest, sincere and very knowledgeable with...

Joe D.

2019-04-18 16:42:12

I've never needed to procure the services of an attorney before and really wasn't sure what to expect. I will admit, though, I kind of did wonder if he'd be...

Joe D.

2018-07-10 05:07:25

I've never needed to procure the services of an attorney before and really wasn't sure what to expect. I will admit, though, I kind of did wonder if he'd be...

Ty B.

2018-06-03 06:16:37

He was kind enough to quickly return my consultation request. He was very knowledgeable and informative. He gave me a key information in a brief phone...

John A.

2017-09-04 08:51:41

I have had an exceptionally positive experience working with Steve. He responded immediately to an email inquiry, and made me feel completely comfortable...

Dave S.

2016-10-21 08:53:43

I was very happy with the service provided. I federal expressed Steve the information and within two days, he reached out to me with all the expert advice...