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If the Plaintiff Dies. In a civil lawsuit, if the plaintiff dies, the beneficiaries and heirs to the plaintiff's estate inherit the lawsuit. The person named in the deceased person's will as his executor, or the person named by the court as administrator of the estate if there is no will, can continue the lawsuit on behalf of the deceased person.
IRS Regulations. According to the IRS, any lawsuit settlement proceeds that a court awards for physical illness or injury are non-taxable. This includes wrongful death settlements, since the damages are imposed due to a courtâs finding that a third party is responsible for the physical illness or injury that resulted in death.