Tax Planning
Anytime there is a significant windfall of money, there are tax issues to follow. Unfortunately, as plaintiffs approach a settlement, there is usually very little discussion about tax planning beyond whether or not the actual receipt of settlement funds is taxable. This initial analysis is only the first level of tax analysis to properly plan for the injured person’s well being in the future. Many plaintiffs are informed by their counsel that payments for “pain and suffering” are not taxable to the plaintiff. So, the funds which a plaintiff receives will not be included on the injured person’s income tax return. This is good news for plaintiffs. However, what happens to the plaintiff in the future once she or he has the money?
Generally, the plaintiff needs to set up a comprehensive estate plan. The greater the settlement value and the more complex the plaintiff’s needs, the more important it is to do tax planning at both the State and Federal levels. This can include not only future income tax planning, but also Federal Estate and Gift Tax planning, Inheritance tax planning and other tax issues.
The goal is to plan to minimize tax exposure at all levels for the future and reduce or eliminate tax “surprises” to the plaintiff or family. These decisions need to be investigated in advance, before the plaintiff accepts his or her money.
How We Can Help
Protect Your Benefits
Protect Your Benefits
Protect Your Benefits
Supplemental Security Income and Medicaid play a key role in providing life sustaining benefits to many people in this country, particularly the disabled. There are very strict asset and income guidelines to maintain eligibility for these programs. Many injured plaintiffs would lose these important benefits without advance planning.
Establishing a Trust
Protect Your Benefits
Protect Your Benefits
When a person settles a personal injury lawsuit, it’s usually the largest sum of money they will ever get at one time. Because the courts want to protect an injured person from squandering their funds or from the designs of manipulating third parties, some type of protective trust is usually involved.
Protecting Your Home
Protect Your Benefits
Protecting Your Home
One of the most common requests we receive from clients and their families when they are accepting a monetary settlement is, “Can we buy a home?” While in the majority of cases, the answer is “Yes”, the means by which a home can be purchased or built can vary greatly - with equally great variations in how the home can be titled, used, and ultimately passed on to family members.