As many of you know, we handle important personal injury cases that frequently have large settlements for the clients. Being an estate planning and estate administration firm helps those that receive these settlements in several ways. Let me briefly touch on a few matters faced by these clients upon receipt of the settlement.
1. Taxes. These takes on two tax concerns. One, is the settlement taxable and two when I die is it taxed again? The easy answer is No, subject to a few exceptions. While lost wages and similar portions of the settlement may be taxed, personal injury settlements by and large are not taxable (such as pain and suffering). And to the second part, there will unlikely be an estate tax when you die unless your estate exceeds 11 million dollars in 2018.
2. Special Needs Trust. Sometimes the injured individual will need a special needs trust to receive the funds to avoid disqualifying themselves from their governmental assistance. Please discuss this with knowledgeable counsel if this issue applies to you.
3. Estate Planning. With the larger settlements you may need to look into having your estate planning documents in place, or review your existing current estate planning documents.
This is not a complete list of all the estate issues surrounding a personal injury settlement but capable legal counsel will be able to assist you if you are in the position of receiving a large amount at the close of your case.
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