When a wrongful death case is brought and settles or is awarded by a jury, one of the most significant and possibly sensitive inquiries is: Who gets the compensation? In California, wrongfully deceased damages are supposed to pay surviving members of the family for their personal losses. But to decide how the money is allocated depends on a host of legal and pragmatic considerations.
This article addresses how compensation from a wrongful death action is distributed under California law, to whom the money is legally entitled, and how disagreements over distribution are resolved.
Purpose of a Wrongful Death Lawsuit
A wrongful death lawsuit allows eligible survivors of a deceased person to recover financial compensation when their loved one dies due to another party’s negligence, recklessness, or intentional conduct. The purpose of the lawsuit is not to punish the defendant but to compensate the surviving family members for the economic and emotional losses they suffer as a result of the death.
Damages awarded in a wrongful death claim are for the benefit of the survivors, not the deceased’s estate (except in the case of a survival action, which is a separate legal claim).
Who Has a Right to Compensation?
Under California Code of Civil Procedure § 377.60, only certain individuals have standing to bring a wrongful death claim—and only those individuals are entitled to share in any compensation recovered.
These eligible beneficiaries include:
- The surviving spouse or registered domestic partner
- The children of the deceased
- The grandchildren, if the deceased’s children are no longer living
- Other heirs under California’s laws of intestate succession (e.g., parents, siblings), if no spouse or children exist
- Putative spouses, stepchildren, and parents—but only if they were financially dependent on the decedentdeath claim to a specific list of individuals. These include:
How Is the Money Divided?
There is no fixed formula under California law for dividing a wrongful death settlement or jury award. Instead, the distribution is guided by:
- Agreement among the heirs, or
- Court determination of a fair and equitable allocation
1. Distribution by Agreement
If all the eligible parties agree on how the money should be divided, they may enter into a written settlement agreement that outlines each person’s share. Courts will generally honor these agreements, so long as they are made knowingly and voluntarily.
This is the most efficient and least contentious method of allocation, particularly in cases where the beneficiaries have a close relationship and mutual trust.
2. Distribution by Court Order
If the parties cannot agree, the court will hold a hearing and determine how to divide the money equitably, considering factors such as:
- The degree of each party’s financial dependency on the deceased
- The closeness of the relationship (e.g., minor child vs. estranged adult child)
- The extent of each heir’s emotional loss and companionship deprivation
- Contributions the decedent made to each beneficiary’s education, support, or care
The court may order an unequal distribution if it believes that a more dependent or more emotionally impacted party should receive a larger share.
What If There Are Minors Involved?
When minor children are among the beneficiaries, California courts take extra precautions to protect their interests. A guardian ad litem is usually appointed to represent the minor’s legal rights. Additionally:
- The court must approve any settlement involving a minor
- The minor’s portion may be placed in a blocked bank account, trust, or structured settlement
- The funds typically cannot be accessed until the minor turns 18, unless the court allows early withdrawals for specific needs
Role of a Survival Action
It’s important to distinguish between damages recovered in a wrongful death lawsuit and those recovered in a survival action. A survival action is filed by the decedent’s estate (usually through an executor or personal representative) and seeks compensation for:
- Medical bills and other losses incurred between the time of injury and death
- Potential punitive damages in cases of gross misconduct
Damages from a survival action go to the estate, not directly to the survivors, and are distributed according to the will or intestate succession laws.
Can an Heir Be Excluded?
If an individual qualifies as a wrongful death beneficiary under California law, they generally cannot be excluded from receiving their share of the recovery—even if they did not participate in the lawsuit. However, the court may reduce or deny a share to a beneficiary who:
- Waived their rights through a legal agreement
- Was convicted of causing the death (under the slayer statute)
- Did not suffer any actual damages, such as a non-dependent estranged relative with no emotional connection
In most cases, the safest approach is to include all potential heirs in the lawsuit or notify them of the pending case and provide an opportunity to participate.
Can Settlement Money Affect Public Benefits?
Yes. Wrongful death compensation can impact a beneficiary’s eligibility for means-tested public benefits such as:
- Supplemental Security Income (SSI)
- Medi-Cal
- Section 8 housing
To protect these benefits, attorneys often help clients set up special needs trusts or structured settlements to preserve eligibility while providing for future needs.
Tax Implications
In general, damages awarded in a wrongful death lawsuit for physical injury or emotional distress are not taxable under federal or California law. However:
- Punitive damages, if awarded through a survival action, are taxable
- Interest earned on settlement funds may be taxable
- If the estate receives damages through a survival action, estate taxes may apply in large cases
It is wise to consult with a tax professional or estate planning attorney to properly manage any settlement funds.
About the Author
Neil Bhartia
Neil Bhartia isn’t your typical, stuffy attorney that you see on TV. While some have their sights exclusively on money and treat their clients like a number, Neil takes a personal interest in every single client he has. As an empath, Neil understands that people that seek legal help are typically in an involuntary, and stressful situation, and he goes out of his way to diffuse the stress and educate clients on each every detail of the legal process.
