I Just Received a Huge Settlement – Why Do I Have to Pay Huge Taxes?
Submitted by New Jersey Civil Lawyer, Jeffrey Hark.
The law is complicated. Tax law is even more complicated. Combine the two and you can find yourself in a real mess. When you receive a settlement, there can be numerous tax consequences that follow. In order to navigate towards the best situation possible, you are going to need to hire an experienced attorney in that field to get you the best result. Otherwise you may find yourself being penalized by the IRS for reasons outside of your control.
A recent case decided in the United States District Court of New Jersey (Estate of Harrison v. Trump Plaza) provides a great example. In the case, the plaintiffs received a settlement in the amount of $500,000.00. In order to the plaintiffs in the best financial position possible, their attorney filed a motion with the court to allocate the settlement proceeds after the case was settled. The attorney allocated minimal funds towards the plaintiffs’ Survival Action and put most of the settlement funds towards the plaintiffs’ Wrongful Death Action instead. This was all done for tax purposes. In addition, a motion had to be filed with the court in order to receive a judgment from the Court that would supersede any administrative decision.
In summary, these issues are immensely complicated. If you receive a large settlement, or have any concerns regarding tax implications on legal proceedings, contact an experienced attorney immediately.