Do I Have To Pay Taxes On My Settlement?

When pursuing a legal claim, the ultimate goal is usually to recover some type of monetary compensation either through settlement of the claim or by court award. The legal term for money an injured person seeks to recover in a lawsuit is  "damages".

The type of damages you are seeking dictate whether or not you are required to pay taxes on the money you receive. The following chart outlines which types of damages are generally taxable as income and which types are not:

1. Damages for a Personal Injury:
Generally NOT taxable as income.

2. Pain/Suffering/Emotional Distress for a Personal Injury:
Generally NOT taxable as income.

3. Pain/Suffering/Emotional Distress for a case that DOES NOT INVOLVE Personal Injury:
Generally are TAXABLE as income.

4. Lost Wages/Back Pay/Front Pay:
Generally are TAXABLE as income.

5. Punitive Damages (awarded by the court to punish wrongdoer):
Generally areTAXABLE as income.

It is ALWAYS wise to consult your attorney AND a tax professional BEFORE accepting a settlement or going to trial on your case in order to fully understand the potential taxes you may have to pay.

Should you have any questions regarding the tax consequences of damages, please do not hesitate to call me at 413-746-4400 or email me at nle@dennerpellegrino.com.

What is a Power of Attorney?

What is a Power of Attorney?

A Power of Attorney is a legal document you sign that gives someone else the authority to handle your personal affairs. There are generally two families of Power of Attorney documents:

 

1. Medical Power of Attorney - A medical Power of Attorney allows you to appoint someone to make medical decisions for you. In some states, such as Massachusetts, a medical Power of Attorney is called a Health Care Proxy.

 

2. Financial Power of Attorney - A financial Power of a Attorney allows you to appoint someone who can have access to your finances and make financial decisions when you cannot.

 

What kinds of things does a Power of Attorney cover?

You can make any Power of Attorney as general or as specific as you like. For example, you can state in a medical Power of Attorney that you would like your representative to make any medical decisions that you would be able to make. Alternatively, you could specify that you only want your medical Power of Attorney to govern life support decisions.

 

You do not lose control of your affairs by creating a Power of Attorney; it is more like sharing control with the person you name as your personal representative.

 

Who can you name as your personal representative?

You may appoint anyone over the age of eighteen (18) to be your personal representative in your Power of Attorney. Your representative does not have to be a family member, but it should be someone you trust to act in your best interests.

 

You may also elect to have more than one personal representative. However, when using more than one representative, you should specify whether each representative has the power to act alone or if they must act jointly on your behalf. For example, is the signature of either your son or daughter sufficient or do you want both to have to sign to convey your consent?

 

After you decide who you would like to name as your personal representative, you should make sure that the person you have chosen is ready and willing to accept this responsibility. You should also discuss your wishes with your personal representative before creating your Power of Attorney.

 

Does a Power of Attorney become active immediately?

Not necessarily. Some states allow you to complete a Power of Attorney that does not take effect unless you become incapacitated. You should check with a legal professional about the specific rules in your state.

 

How long does a Power of Attorney last?

A Power of Attorney only lasts as long as you have the capacity to handle your own affairs. For example, if you create a financial Power of Attorney that names your son as your personal representative, but later dementia causes you to become unable to handle your affairs, the Power of Attorney becomes invalid.

 

If you would like your personal representative to maintain the ability to handle your affairs in the event that you are no longer able to, you need to create a Durable Power of Attorney. A Durable Power of Attorney is the same as a regular Power of Attorney, except that it remains in effect even after you become unable to handle your own affairs.

 

Can I revoke my Power of Attorney?

You can terminate your Power of Attorney at any time as long as you still have the capacity to do so. If you want to revoke your Power of Attorney, you should consult with a legal professional as the steps for revocation are different in each state.

 

Do I really need a Power of Attorney?

Yes! You may think that in the event you become incapacitated your spouse or children will automatically be able to make medical and financial decisions on your behalf.

 

However, the reality is that without a Power of Attorney, someone will have to go to court to have a person appointed to handle your financial and medical affairs. Going to court is costly and time consuming; and when you become incapacitated, sometimes very important decisions need to be made immediately.

 

It is very simple and relatively inexpensive to have a legal professional create a Power of Attorney for you, and it can save your family a lot of problems down the road in the event that you become incapacitated.

 

Unexpected events (for example, motor vehicle accidents) happen frequently in today's world. Even newlyweds should consider creating a Power of Attorney in the event that they become incapacitated by an unforeseen event.

 

I want to create a Power of Attorney. Who do I call?

Contact an attorney licensed in the state you live in, as each state has different rules regarding Power of Attorney documents.

 

If you have any questions about Power of Attorney documents generally, or if you would like to create a Power of Attorney in CT or MA, please contact me at 413-746-4400 or at nle@dennerpellegrino.com.

Personal Injury Claims Against Cities and Towns in Massachusetts

All claims for personal injuries, death or loss of property caused by the negligent act or omission of any city or town employee are governed by Massachusetts General Law Chapter 258. 

Some examples of types of claims covered by this chapter are:

1. Bicyclist injured when riding over pothole on public roadway;
2. Drowning caused by lifeguard failing to monitor city pool;
3. Slip and fall on city property;
4. Property damage or injuries caused by city water main break, etc.

In order to proceed with a claim against a city or town, the injured person must send a "presentment letter" to the mayor within two (2) years from the date the injury occurred. Failure to send this letter within two (2) years from the date of injury will bar the injured person from proceeding with any claim against the city or town.

The injured person cannot file a suit in court against the city unless: 1) the major or his agent has sent a written denial to the presentment letter or 2) six (6) months have elapsed since the date the injured person sent the presentment letter.

A lawsuit against a city or town must be filed in the Superior Court for the county in which the city is situated or the county where the injured party resides.

The maximum amount an injured person may recover from a city or town under Massachusetts law is $100,000.

If you or someone you know has been injured on city property or due to the negligence of a city employee within the last two (2) years, you should consult an attorney immediately.

Feel free to contact me with any questions at 413-746-4400 or nle@dennerpellegrino.com. 

 

SOCIAL NETWORK PITFALLS

With the popularity of social networks rising, it is important to understand the legal consequences of posting information or photos.

Anything you post online can be used against you in a court of law - and not just in criminal matters. Once you post publicly on social networking sites, all information and photos posted are free to access and remain in internet storage for a long time.

Here are some of the ways in which information or photos you post online may pose legal risk to you:

Criminal Activity: You can be investigated and arrested by the police for any social network post or photo which discloses criminal activity, no matter how minor it may seem. Beware that even joking about illegal activity may result in your arrest.

Personal Injury: If you have a pending legal claim for a personal injury, worker's compensation and/or social security disability, you are claiming that you are hurt. Any evidence you post on social networking sites demonstrating the contrary can be used against you in court. For example, if you are claiming to be out of work due to an on-the-job injury, but post photos of your recent skydiving trip on your social networking site, it may be used against you and do irreparable damage to your case. 

Family Law:  Social networking posts and photos are now being used as evidence in up to 90% of divorce and custody cases in some areas. Do not post any information on social networking sites that may be used against you in family court. For example, in a divorce case a man claimed that he did not have anger management issues; but his social networking profile stated under his "About Me" section that  "I'll kick your ass if you get in my face". This information was used to undermine his credibility and his case.

Attorney/Client Confidentiality: Everything you tell your attorney is subject to an attorney/client privilege and cannot be used against you in court. However, if you breach this confidentiality by posting on social networking sites, the information you post is no longer privileged. Do not post any information or photos on social networking sites about any ongoing legal matter you have. If you are unsure what you should/should not post, speak to your attorney about the types of information posted on social networking sites that may have a negative effect on your specific case.

Identity Theft/Predators: Social networking sites are the easiest place for thieves and predators to collect personal information about their victims. Never post your address or other confidential information which could be used to steal your identity. Also be very careful about posting when you are away from home, such as using the "check in" feature on many social networks, as potential thieves may use the opportunity to burglarize your home while you are out.

Before posting anything online, always take a moment to ask yourself if it could ever come back to haunt you. When in doubt, do not post!