8 steps to calculating economic damages in wrongful death cases

1. Collect the client documents necessary to evaluate earnings and benefits losses

To determine what an individual was capable of earning had they not died, you should start by reviewing the earnings and benefits documents they received before their death. Tax and employment documents provide insight into their earnings, and employee handbooks and contribution descriptions reveal employer provided benefits. [read more...]

2. Determine the length of the damages

In wrongful death cases, damages continue through the person’s projected life expectancy had they not died. To calculate the length of damages related to earnings and benefits, a work life expectancy or specific age of retirement should be utilized. [read more...]

3. Calculate the earnings and benefits your client would have received, had they not died

The non-incident earnings and benefits are what your client is projected to have earned had they not died. In many cases, their historical earnings provide the best guide to what they would have earned. In other instances, when the historical earnings may not represent someone’s earnings capacity, averages for similarly-situated individuals may be used. [read more...]

4. Project the earnings and benefits they would have received in the future, had they not died

Once non-incident earnings and benefits have been determined, the next step is to project the damages into the future. Usually, the longer someone works, the more they earn. Projecting future losses of earnings and benefits accounts for these increases. Generally, a growth rate is applied to account for these expected increases. [read more...]

5. Adjust for income taxes, if relevant

Depending on the jurisdiction, income taxes may need to be incorporated into an analysis of economic damages. The application of income taxes to an analysis may be relevant to one or more factors in an economic damage analysis, again, depending on the jurisdiction rules. [read more...]

When applying income taxes to the damages related to someone’s death, there there are three common methodologies to determine the effective tax rate to apply: using the individual's historical taxes, historical taxes for similar people, or tax tables. [read more...]

6. Adjust for personal consumption, if relevant

In some jurisdictions, families may sue for the full loss of earnings and benefits the decedent would have earned. In others, they may only sue for the loss of support they would have received from the decedent. When analyzing the loss of support, an amount for personal consumption or personal maintenance may need to be subtracted from the earnings. [read more...]

7. Determine the past and future losses

Economic damages may be relevant for two time periods: from date of death to the present, and from the present into the future. These are referred to as past losses and future losses. [read more...]

8. Discount the losses to present value

The final step to calculating the damages related to the decedent’s earnings and benefits is to adjust any future damages to present value. The present valuation of future damages accounts for the time-value of money. In short, money received today is more valuable than money received in the future, as money received today may be invested and earn interest over time. To convert the future damages to present day value, a discount rate is applied which accounts for projected interest. [read more...]

Damage Guide calculates economic damages in personal injury, wrongful death, employment, and business cases.

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