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In a mesothelioma lawsuit, what are the tax liabilites for wrongful death and survivors settlements.
Anonymous3 views3 answers
Our family must decide how to divide the settlement between wrongful death and survivors shares. We thought we could place the whole amount under wrongful death but the lawyers are saying that would bring tax liability and that we must put some portion in the survivors share.
Joseph Jonathan BrophyEthics / Professional Responsibility LawyerWhite Plains, NY ·
Generally wrongful death and survivors' actions settlements are both free of tax consequences. Ask your lawyer to explain specifically why they are concerned about tax consequences. Maybe they know something I don't know. Then, seek an opinion from a good tax accountant or tax lawyer. It will be money well spent.
Ordinarily, the proceeds from any personal injury or wrongful death settlement is not considered "taxable income" by the IRS but, you should consult with a CPA or tax attorney about this.
I agree with the earlier answer, but would add that any amount of money that might be construed to be punitive or exemplary damages, or payment for confidentiality will be taxable. I would suggest that the agreement not be confidential, or, if it is, that a small amount be set out in the agreement as being paid for the confidentiality. I also would suggest that the pleadings be amended to withdraw any prior allegations of punitive or exemplary damages. Finally, I would suggest that the settlement agreement specifically set out that none of the damages are for punitive or exemplary damages.
