My wife’s father was killed in a collision a while back. He was her only remaining parent. We enlisted a lawyer to fight on behalf of the family for the insurance benefit on the truck that killed him.
If we are able to get a settlement, would that money be considered part of the estate (and potentially taxable)? Would it be considered an external case that was “damages only” with no “punitive” reward? Or, because this is filed by the children of the deceased claimant, would any money received as a result of the lawsuit be considered “punitive”?
Help?
Jo Blo
February 19, 2010 at 12:49 pm
the lawyer you have hired should be able to explain all that to you.
Mathew
February 19, 2010 at 12:54 pm
Yes or No answers to this question are not going to be available. Until the case is settled and the terms of that settlement known would anybody be able to answer your questions. Most of any award will likely go to your wife not the estate. You should confer with the attorney handling the case for greater detail.
amazed
February 19, 2010 at 1:26 pm
this would depend on who the plantiff is or was in the lawsuit against the other driver. if the estate (through the executor) has filed the suit, any and all monies received would be includable in the decendents federal ( if required) and state(s) estate tax return.
taxability of the amount will depend on the total gross taxable estate.
if any suit was brought by a survivng spouse or children. then any damages awarded may be taxable based on the type of damage and award and the irs regulations regarding the taxability on such award.
if the damages awarded are deemed taxable. they are included in the individual tax return of the person who filed suit and received the settlement or payment.