INCOME TAXATION OF CONFIDENTIALITY AGREEMENTS IN PERSONAL INJURY CASES
by Thomas D. Begley, Jr., CELA Frequently, large personal injury settlements contain confidentiality agreements. Unless these agreements are handled properly, they can result in a significant income tax liability to the plaintiff. As a general rule, recoveries in personal injury actions are excluded from federal income tax under §104 of the Internal Revenue Code. However,…
PARENTS’ ESTATE PLANNING FOR PERSONAL INJURY VICTIMS
by Thomas D. Begley, Jr., CELA Personal injury victims frequently receive means-tested public benefits. They often establish Self-Settled Special Needs Trusts (SSSNTs) to hold the personal injury settlement, so that the settlement does not interfere with public benefits eligibility. However, it is important that parents not leave these children with disabilities monies as part of…
CONSIDERATIONS IN DRAFTING A DISABILITY ANNUITY SPECIAL NEEDS TRUST
by Thomas D. Begley, Jr., CELA There are four main issues to be considered in drafting any trust involving a potential Medicaid recipient. These include: Availability; Transfer of asset penalty; Payback provision; and Tax considerations, including income, gift and estate taxes. Let’s examine each of these issues in the context of a DASNT. Availability. The…
HOW MUCH MUST BE SET ASIDE FOR MEDICARE IN A THIRD PARTY LIABILITY CASE?
by Thomas D. Begley, Jr., CELA Once a Medicare Set-Aside Arrangement (“MSA”) has been considered, the next question is how much is necessary to fund it. If future medicals have been plead or claimed and future medicals are specifically released in a Release signed in connection with the third party liability (“TPL”) settlement, then it…