what are the tax consequences of a wrongful death settlement?

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what are the tax consequences of a wrongful death settlement?

Asked on April 13, 2009 under Accident Law, Oregon

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 13 years ago | Contributor

Well this is truly a loaded question.  Depends on how your state handles such settlements and if they are made to the family directly or through a trust account (especially for minors).  Check out the following to begin your review and then contact your counsel or counsel specializing in taxation and personal injury lawsuit settlements and orders:

30.030 Distribution of damages. (1) Upon settlement of a claim, or recovery of judgment in an action, for damages for wrongful death, by the personal representative of a decedent under ORS 30.020, the amount of damages so accepted or recovered shall be distributed in the manner prescribed in this section.

      (2) The personal representative shall make payment or reimbursement for costs, expenses and fees incurred in prosecution or enforcement of the claim, action or judgment.

      (3) The personal representative shall make payment or reimbursement for reasonable charges necessarily incurred for doctors’ services, hospital services, nursing services or other medical services, burial services and memorial services rendered for the decedent.

      (4) If under ORS 30.040 or 30.050 or by agreement of the beneficiaries a portion of the damages so accepted or recovered is apportioned to a beneficiary as recovery for loss described in ORS 30.020 (2)(d), the personal representative shall distribute that portion to the beneficiary.

      (5) The remainder of damages accepted or recovered shall be distributed to the beneficiaries in the proportions prescribed under the laws of intestate succession of the state of decedent’s domicile, but no such damages shall be subject to payment of taxes or claims against the decedent’s estate. [Amended by 1973 c.718 §3]

 


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