WRONGFUL DEATH DAMAGES

Because most wrongful death damage awards are paid in a lump sum, a beneficiary essentially receives the total amount of earnings and benefits the decedent would have made over the course of his/her life, reduced to a single amount which is discounted to present dollars. A life expectancy table is used to calculate present value.

Example: A spouse worked in a department store earning $20,000 a year. Assuming he works there for the next 40 years, he will make a total of $800,000 by the 40th year. The spouse suddenly dies as a result of a wrongful death. The surviving spouse would recover a lump sum payment designed to compensate her for the $800,000 loss, discounted to present dollars.

How is present value calculated?

In order to calculate present value, the future loss is first calculated using the life expectancy table. Once the future loss amount is calculated, it is then discounted using a mathematical table. The mathematical table estimates today's value of one dollar in the future based on the number of years the decedent was expected to live and an annual interest rate. After that is determined, the estimate from the table is multiplied by the decedent's yearly salary. The purpose for using present value is that a successful plaintiff will receive a sum that if invested at a reasonable interest rate, should equal the value of the future loss amount and cover expenses that may eventually arise if it is conservatively invested.

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