Kim wrote:

- quote -

Can't tell. After the wrongful death, is pain/suffering one
of the leftovers? Payments for physical personal injuries
are excludible. The answer is going to be determined by the
actual wording of the settlement agreement.

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"Kim" <flhspam72[at]adelphia.net> wrote:

- quote -

That depends. You have to look at the complaint filed with
the court, and the settlement agreement. The chances are
that most of it is exempt as compensation for personal
injuries. But some of it may be for lost income, which
would be taxable.

- quote -

To the extent they receive taxable income that tax was never
paid on, yes, some liability. The extent of that liability,
though depends on what other property was in her estate,
what her will says and what state law is.

Stu

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My relative died in 2003 as the result of a car crash. When
she died she had a pending lawsuit with the driver of the
car that hit her.

Last month the lawsuit was settled out of court. The lawsuit
was settled for approximately $500,000. After attorney's
fees, repayments to Medicaid and payments to survivors of
the wrongful death portion of the lawsuit, there was a net
to the estate of about $200K.

My question is this: Is this considered taxable income to
the estate? Is there an estate tax? Do the beneficiaries of
the residual estate funds assume the tax liability? If it is
taxable - what is taxable? The actual check amount to the
estate (200K) or the total amount of the lawsuit settlement
(500K)?

I pored through the Irs.gov site and got conflicting answers
or no answers to all these questions - decided to turn to
the experts!

--
Kim

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