How Wrongful Death Settlements Are Paid Out?

Wrongful death settlements can bring much-needed financial relief to families after a tragic loss—but most people don’t know what to expect when the case is finally resolved. Who gets the money? When will it arrive? And how is it actually paid out?

In this guide, we break down exactly how wrongful death settlements are handled in New Jersey—from the moment the case settles to when the funds reach your family.

What Happens After a Wrongful Death Settlement Is Reached?

When Do You Get Paid?

Once a wrongful death case settles, most families expect a check right away—but the reality is, there are a few steps between settlement and payout.

Generally, it takes anywhere from 30 to 90 days to receive the settlement funds after all documents are signed. However, the actual timing can vary depending on several factors:

• Probate review: If the settlement needs to pass through the estate, the probate court may need to approve the distribution.
• Liens: Medical liens, Medicaid, or other debts may need to be resolved before funds are released.
• Disputes among beneficiaries: If multiple parties disagree over how to split the settlement, the delay could extend longer.

At Rosengard Law Group, we work proactively to speed up this process—coordinating with the court, lien holders, and family members to keep everything on track.

Who Actually Pays the Settlement?

In most cases, wrongful death settlements are paid by the at-fault party’s insurance company. That might be a driver’s auto insurer, a hospital’s malpractice carrier, or a business’s general liability insurer.

But what happens if there’s no insurance—or not enough to cover the damages?

• Direct payment from the defendant: In rare cases, individuals or businesses may be held personally liable if insurance is denied or limits are exceeded.
• Multiple defendants: If more than one party shares responsibility, each insurer may pay a portion.
• Uninsured claims: We may pursue claims against a victim’s own policy (e.g., uninsured/underinsured motorist coverage) when appropriate.

Before any settlement is accepted, our Cherry Hill wrongful death attorneys make sure all payment sources are identified—and that you’re not leaving money on the table.

Lump Sum vs. Structured Settlement – What’s the Difference?

Once a wrongful death case is resolved, the next question is: how will the money be paid out? Families typically receive the settlement in one of two ways—either as a lump sum or through a structured settlement paid over time. Each option has advantages and drawbacks, depending on the needs of the beneficiaries.

Lump Sum Payments

A lump sum is a one-time payment made shortly after the case settles. It’s the most common method used in wrongful death claims, especially when the beneficiaries need immediate access to funds for funeral costs, medical bills, or lost income.

When are lump sums used?

• In most standard wrongful death settlements
• When the insurance policy limits are clearly defined
• When the beneficiaries prefer immediate access to the full amount

Pros:

• Immediate financial relief during a difficult time
• Full control over how the money is used or invested
• Simple, straightforward distribution

Cons:

• Risk of mismanaging the funds over time
• No built-in financial safeguards or ongoing income
• Possible impact on eligibility for certain benefits (e.g., SSI)

Structured Settlements

A structured settlement is paid in installments—monthly, quarterly, or annually—over a set period. These are more common in larger settlements or when beneficiaries want to ensure long-term financial support.

How do structured settlements work?

• The settlement is placed into an annuity or financial instrument
• Payments are made over time according to a schedule
• Often used to support minors, disabled dependents, or elderly parents

Pros:

• Provides steady, predictable income over time
• May offer tax advantages depending on structure
• Helps prevent large lump sum mismanagement

Cons:

• Less flexibility—funds are locked into the payment schedule
• Delays in receiving full value of the settlement
• May not be ideal for families who need large upfront funds

At Rosengard Law Group, we help you evaluate both options based on your family’s financial goals, responsibilities, and long-term needs. We also coordinate with financial planners to ensure the settlement is structured in your best interest.

Who Gets the Money in a Wrongful Death Lawsuit?

One of the most common questions families ask is, “Who actually gets the settlement money?” The answer depends on the structure of the legal claims filed and whether the deceased had a will. In New Jersey, the distinction between wrongful death and survival actions plays a big role in how funds are distributed.

Direct Beneficiaries vs. the Estate

In a wrongful death claim, the settlement is paid directly to the surviving family members who were financially dependent on the deceased. These funds are not considered part of the estate and are not subject to estate taxes or creditor claims.

In a survival action, however, the money is paid to the estate of the deceased—because the claim is based on damages suffered by the person before they died (like pain, suffering, or lost wages). This money becomes part of the estate and is distributed according to the will or New Jersey’s intestacy laws.

So the difference is key:

• Wrongful death: Paid directly to family members (tax-free, creditor-safe)
• Survival action: Paid to the estate, then distributed (and may be subject to claims)

New Jersey’s Intestate Succession Rules

If your loved one died without a will, New Jersey’s intestacy laws determine who receives a share of the estate or settlement. The order of priority typically looks like this:

• Spouse and children: They take first priority in most cases.
• Parents of the deceased: May receive a share if there is no spouse or children.
• Siblings, nieces, and nephews: Can receive a portion if they were financially dependent or if higher-priority beneficiaries are absent.

The court may also consider dependency and other financial factors when dividing the funds. If there’s a dispute, the probate court may get involved to resolve it fairly.

What About Creditors?

Creditors generally cannot access funds paid out through a wrongful death claim because that money goes directly to the beneficiaries—not the estate. However, survival action proceeds are part of the estate and can be subject to creditor claims.

This means if the deceased owed significant debts—like medical bills, taxes, or loans—creditors may have the right to claim a portion of the survival action settlement before anything is distributed to heirs.

At Rosengard Law Group, we help families understand how to protect their compensation and minimize exposure to estate-related debt. If you’re unsure what applies in your case, we’ll guide you through the best legal strategy to preserve your family’s recovery.

How Are Wrongful Death Settlements Divided Among Family Members?

Once a wrongful death settlement is secured, the next step is dividing the compensation. In New Jersey, this isn’t always automatic or equal—especially when multiple family members or dependents are involved. The law takes into account each person’s relationship to the deceased, as well as their financial dependency.

Is Everyone Entitled to an Equal Share?

No. New Jersey law does not assume that all beneficiaries should receive the same amount. Instead, the division of a wrongful death settlement is based on:

• The degree of financial dependency on the deceased
• The closeness of the relationship (spouse, child, parent, etc.)
• Any evidence of prior support (like shared housing or financial contributions)

In many cases, the family agrees on a fair distribution. But when they don’t, the court may step in. If there’s a dispute, the probate judge will evaluate the facts and decide how to divide the settlement equitably—often after a hearing where each party presents their case.

Rosengard Law Group helps families avoid unnecessary conflict by clearly outlining distribution plans in advance and managing expectations from the start.

Can Non-Relatives Receive a Share?

Yes—under New Jersey law, a person does not have to be a blood relative to receive part of a wrongful death settlement. If someone was financially dependent on the deceased, they may be eligible for compensation.

These might include:

• Long-term domestic partners
• Stepchildren or foster children
• Roommates or caretakers supported by the deceased

However, the burden of proof is high. Non-relatives must show clear, documented evidence of financial dependency—such as shared bills, tax filings, or testimony from others. Without strong proof, the court may reject their claim.

At Rosengard Law Group, we help eligible dependents build strong claims for inclusion and protect rightful shares from being overlooked or contested.

Do You Pay Taxes on a Wrongful Death Settlement?

One of the most common concerns after a wrongful death settlement is whether the money will be taxed. The good news: in most cases, wrongful death compensation is not taxable. However, there are some exceptions depending on how the funds are categorized.

Overview of Federal and NJ Tax Treatment

Under federal law—and New Jersey tax rules—most of the money recovered in a wrongful death lawsuit is considered a compensatory payment. That means it’s meant to reimburse the family for losses like income, services, or companionship, not to provide a windfall.

As a result, the IRS does not typically treat wrongful death settlements as taxable income, and New Jersey follows the same approach.

What’s Usually Tax-Free

The following portions of a wrongful death settlement are generally not taxed at the federal or state level:

• Lost income or financial support that the deceased would have earned
• Loss of services (childcare, household tasks, etc.)
• Loss of companionship or guidance
• Funeral and burial expenses

Because these are considered to “make you whole” rather than provide profit, they’re excluded from income taxes.

What Might Be Taxable

There are a few circumstances where part of your settlement could be taxed:

• Interest: If interest accrued on the settlement during the legal process or as part of a structured payout, that interest is taxable as income.
• Survival action damages: If part of the recovery is for the deceased’s pain and suffering, lost wages before death, or punitive damages (rare in NJ), some of that may be taxable.

It’s also worth noting that if your wrongful death proceeds go through the estate (as with a survival action), they may impact estate tax thresholds—but only in very high-value estates.

At Rosengard Law Group, we work closely with tax professionals to help families understand what’s owed, what’s protected, and how to maximize the value of their recovery.

How Rosengard Law Group Helps Families Navigate Settlement Payouts

Securing a wrongful death settlement is only part of the battle. Making sure the funds are distributed properly—and protected from delays, disputes, or unnecessary losses—is where Rosengard Law Group adds lasting value.

We don’t just win cases. We help families move forward with clarity, structure, and support.

• We guide you through probate and payout logistics: From court filings to executor appointments to final disbursement, we walk you through every step and handle the legal red tape for you.
• We coordinate with estate attorneys and financial advisors: Wrongful death settlements often touch multiple areas of life—wills, taxes, structured payouts, and trusts. We collaborate with your other professionals to ensure everything works together.
• We protect your family’s long-term interests: Whether that means helping set up a structured settlement, minimizing tax exposure, or avoiding probate disputes, our priority is your peace of mind—not just your payout.

If you’re navigating a wrongful death claim—or have reached a settlement and need help with what’s next—Rosengard Law Group is here to lead the way. Your family’s future deserves careful handling, and we’ll make sure you’re taken care of at every stage.

Final Thoughts – Get Clarity Before You Settle

Wrongful death settlements often represent the final chapter in a painful journey. But how that chapter is handled can have long-term effects on your family’s financial stability and emotional closure.

These settlements can absolutely change your life—especially when they’re managed with care, precision, and foresight. That’s why it’s critical to make decisions with full clarity and trusted legal support.

Start with a free consultation from Rosengard Law Group. We’ll explain your options, outline your next steps, and help you avoid the common mistakes that can cost families time and money after settlement.

Whether you’re still negotiating a settlement or you’re unsure how to divide or distribute the funds you’ve won, we’re here to guide you through every detail—with compassion, experience, and proven results.

Call today or schedule online. Let’s make sure your settlement protects what matters most: your family’s future.

FAQs About Wrongful Death Settlements in NJ

How long does it take to receive a wrongful death settlement?

Most families receive settlement funds within 30 to 90 days after the case is resolved. However, the timeline can be extended if the case involves probate approval, medical liens, or disputes among beneficiaries. At Rosengard Law Group, we work to streamline this process and minimize delays.

Can siblings receive part of the payout?

Yes, but only under certain conditions. If the deceased had no spouse, children, or parents, then siblings may be eligible—especially if they were financially dependent. If there is a will or the estate falls under New Jersey’s intestate laws, sibling claims will be evaluated accordingly.

Is the settlement public or private?

In most cases, wrongful death settlements are private. If the case is resolved outside of court through a negotiated settlement, the terms are typically confidential. However, if the case goes to trial and results in a judgment, the details may become part of the public record.

Can you choose lump sum vs. structured?

In many cases, yes. The settlement structure can be negotiated based on your family’s needs. Lump sums offer immediate access to funds, while structured settlements provide steady income over time. Rosengard Law Group helps you evaluate both options and choose what works best for your situation.

What happens if beneficiaries disagree on the division?

If family members can’t agree on how to divide the settlement, the court may intervene. A probate judge will consider factors like dependency, relationship, and fairness to determine how the money should be distributed. Our team helps avoid conflict by creating clear plans before disputes arise.