Actually you when you do a settlement, by law the attorney's must detail where every dollar goes to, where it is used, and how it is for the IRS so that it can be reported. When a settlement is done for instance on Injury or Pain and Suffering the money cannot be taxed. When settling a case, many take less money on the settlement to put it all into Pain and Suffering. However, Punitive damages are always taxes, so when we settle a case we have a tendency to try to get the damages especially in wrongful death put in different categories. Income Loss is always taxed, I know they claim its not, but they always tax it. So the long answer is any attorney would write it out to cover in specific categories, in most states it is actually unethical not to, and the attorney will be punished. If the attorney actually does not properly detail it, you may be taxed on all of the money.
Also it has an impact on how the payments are structured. Lump Sum payments versus a long term payment plan. Longer term plans you get less money but lower taxes because the lump sum tax increase is high.