I read your question, and you are involving yourself in something which has always been a pet peeve of mine. You are supposedly telling the members of this forum what the lawyer told your girlfriend's mother, who then told your girlfriend, who then told you. You are asking for an opinion. I assume you are then going to tell your girlfriend, who will tell her mother, who will tell the lawyer. This is like playing "whisper down the lane," and there are too many chances to screw up.
If your girlfriend doesn't understand what is going on, since she is a minor, let her and her mother meet or speak with the lawyer and get an explanation. The lawyer knows the facts and he is in the best position to give an opinion. If for some reason they do not trust that lawyers opinion, then they can get a second opinion
I agree with Chris; personal injury settlements are not subject to income tax obligations.
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Only the 'lost wages' portion of a settlement is taxable.
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Under current IRS regulations, a personal injury settlement is not subject to taxation. Money received for a minor must be placed in a guardianship of the property account overseen by the Probate Court.
I suggest that your friend speak directly with her attorney and get straight answers. She should make sure that her recovery is fully protected until she turns 18. It would also be beneficial for your friend to speak with a CPA about how she could best invest her recovery and maximize its return in the future and minimize tax consequences on the future interest earnings.
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Mr. Lundeen is licensed to practice law in Florida and Vermont. The response herein is not legal advice and does not create an attorney/client relationship. The response is in the form of legal education and is intended to provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that, if known, could significantly change the reply and make it unsuitable. Mr. Lundeen strongly advises the questioner to confer with an attorney in your state in order to ensure proper advice is received.
This ans. does not create an attorney/client relationship.
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