wrongful-death settlement, taxes and trusts

[DannoXYZ]

OK unless I missed something in your OP that's not what was mentioned. It changes things quite a bit. In this case the daughter rightly has no right to the payments. So, I am confused, why do you think any payment to the daughter should not be fairly taxed in the exact same way than any other inheritance (in case your dad decides to write a will for those accumulated payments to benefit his grand daughter) or gifting? As mentioned tuition may be exempt from taxes. What other benefit are you seeking that everyone else is not benefitting from and where everyone else pays their fair share? Why do you think your family should be treated differently?

Not everyone lives on average line, so you can't treat everyone same. Sliding tax-rates based on income is one way tax-man doesn't think everyone should be treated same. You are disagreeing with tax-man, so that's fine.

Here's one example, let's say my brother was to live another 10-15yrs and earn same amount as settlement. He ends up paying much, much less to tax-man than daughter would if settlement went from my dad's account to her.

Note that gift-taxes is owed by giver and paid by giver based upon giver's tax-bracket, not receivers. So even if my dad was to split up settlement into 10-15 pieces for each year, taxes he would have to pay is higher than what my brother would've paid on those exact same earnings. How is that "fair"?

How would you structure things so that total tax-amount paid is same as my brother's income-taxes for those 10-15 years? Would you consider that "fair"?

 

[El OchoCinco]

I believe personal injury compensatory awards are NOT taxed but punitive damage awards are TAXED.

You have to have clear statements from the court award defining the how the award is classified or the breakdown between compensatory and punitive.

So do you know the make up of the award from the court?

You need a trust and estate lawyer.

 

[DannoXYZ]

OK unless I missed something in your OP that's not what was mentioned. It changes things quite a bit. In this case the daughter rightly has no right to the payments. So, I am confused, why do you think any payment to the daughter should not be fairly taxed in the exact same way than any other inheritance (in case your dad decides to write a will for those accumulated payments to benefit his grand daughter) or gifting? As mentioned tuition may be exempt from taxes. What other benefit are you seeking that everyone else is not benefitting from and where everyone else pays their fair share? Why do you think your family should be treated differently?

Besides, IRS considers compensatory settlement fitting for damages in suit and doesn't consider it taxable. Why would you then think that taxing it is "fair"?

Real issue here is determining who should receive that tax-free settlement. And I don't think IRS's determination, based upon pain or suffering or inheritance order is accurate way to allocate receiver of tax-break.

 

[DannoXYZ]

I believe personal injury compensatory awards are NOT taxed but punitive damage awards are TAXED.

You have to have clear statements from the court award defining the how the award is classified or the breakdown between compensatory and punitive.

So do you know the make up of the award from the court?

You need a trust and estate lawyer.

I think there is way for attourney to petition court to re-allocate settlement funds, which is sitting in attourney's trust fund. This is separate matter than wrongful-death case itself, which is now concluded and closed. Will consult some attourneys on estate and trust topics, thanks!

 

[El OchoCinco]

Also, I highly doubt you can petition a court to overturn a jury award and reclassify the category of damages awarded for tax purposes. Jury awards can be appealed but not for classification so what you said does not make sense to me.

Money can be transferred to a trust for the benefit of the daughter with father (grandfather?) as trustee). If the majority of the award is punitive damages you may not have any recourse but to pay the taxes and keep the net award amount and move on. But a trust and estate lawyer can tell you more definitively.

 

[Sig]

Of course I made an estimate, never claimed otherwise. And this has nothing to do with democracy. Or were people initially consulted to vote for a civil suit system. Or did people decide on untrained jurors who wrongly decided in thousands of cases when someone's life was at stake? Thousands of decisions that you now take as unchangeable were decided without democracy in mind. Guess what, for example the second amendment is called an amendment. It means the constitution was amended at some point. Laws you claim are just there and can't be changed can in fact be changed. But it takes people to inform the cattle class that an inferior status quo does not have to remain so.

So you accuse me of pulling stuff out of my ass when you make all sorts of claims about my company? You never posted an image of your work setup. Not one of your claimed educational credentials. Yet everywhere you boast what an awesome entrepreneur you are. And then you pull stuff out of your own ass about others being in business or not. I smell hypocrisy.

Actually I think I've invited 3 of your aliases to come visit me at my office, you always go silent on that but I'll extend the invite again. Regardless, me aside there are no shortages of entrepreneurs and businesses started in the US, far more than anywhere else, so obviously this terror of civil suits you seem to have is limited to you and we're all doing just fine. By the way, democracy means we change laws when the majority agrees the changes are needed, never said otherwise did I? If 50M out of 400M plus want to change a law, it does not a majority make. Seems you have as much problem with math as with making up numbers (your "estimate" as someone who doesn't even live in the U.S. on how many in the U.S. want to change wrongful death liability laws is pure pulling numbers out your ass, let's be crystal clear about that). And again, you need to chill out bruddah.

 

[DannoXYZ]

I believe personal injury compensatory awards are NOT taxed but punitive damage awards are TAXED.

You have to have clear statements from the court award defining the how the award is classified or the breakdown between compensatory and punitive.

So do you know the make up of the award from the court?

You need a trust and estate lawyer.

It's two-step process. Wrongful-death suit is done and closed. Settlement has been paid to my brother's estate and sitting in attourney's account.

Next step is distributing the funds and there's numerous ways to do it. I'm exploring options and if there's way to pass it directly into trust fund. I think technically, it is currently owned by my brother's estate.

 

[DannoXYZ]

Also, I highly doubt you can petition a court to overturn a jury award and reclassify the category of damages awarded for tax purposes. Jury awards can be appealed but not for classification so what you said does not make sense to me.

Money can be transferred to a trust for the benefit of the daughter with father (grandfather?) as trustee). If the majority of the award is punitive damages you may not have any recourse but to pay the taxes and keep the net award amount and move on. But a trust and estate lawyer can tell you more definitively.

no jury involved. Case is over and closed. All settlement is compensatory and already paid. Exploring options on getting it out of attourney's holding/trust account and distributed to "daughter". Going to ask CFP & tax-attourneys about trust-fund options and how to structure them. Thanks!

 

[El OchoCinco]

A non-jury damages award? Was this a settlement out of court or a bench trial?

Who declared that all settlement is compensatory? A court declares that specifically, you cannot state it yourself.

 

[Overnight]

@DannoXYZ Hehe.

In this video, your thread, the very beginning, is the city, and the citizens in it. Groot is the alien ship. The rest of the posters are just getting caught up in the tractor beams.

I cannot help but to post analogies like this, of what I see.