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Thank you for your question. Please permit me to assist you with your concerns.To answer directly, any settlement that you receive based on 'pain and suffering' is generally not taxable. That is because a settlement is set to make the parties whole and the pain and suffering would therefore not be a profit. Any punitive damages or claims that are granted would be taxable since that is essentially far and above the initial award. As for what your attorney stated, it happens to be accurate--you can write the settlement in a manner that a portion is automatically designated to the attorney--since it never technically touches your assets, it does not become your asset and it bypasses any sort of a tax obligation that may exist. The attorney is not quite correct on the fact that since it is a minor's case, you aren't liable--it simply may transfer tax liability to the son. But if it was based on pain and suffering, it not taxable outright.Please let me know if that helps. I genuinely sympathize and hope that your son is able to beat this as soon as he can. It is simply unconscionable to treat those weaker and different to such an extent.Good luck.
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