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Estate planning for terminally ill clients with pending lawsuits

Advising a client with a terminal illness requires careful attention to detail. Assets must be managed carefully to ensure the client has enough funds to provide for them while alive, while minimizing potential estate tax liability when they pass.

What if your client has a potential or pending personal injury lawsuit?

Individuals diagnosed with mesothelioma or other asbestos-related diseases may be able to recover damages from entities responsible for exposing them to asbestos. Because the compensation in these types of lawsuits can be significant, it is important that clients are first advised to investigate the possibility of bringing an asbestos-exposure claim if they have not already done so. 

Portions of a personal injury settlement may be taxable

If the personal injury lawsuit is related to your clients’ terminal illness, the estate plan will need to factor in potential tax liability. While the majority of settlements arising out of a personal injury lawsuit are tax-free, any punitive damages or compensation for lost wages or lost profits may be taxable as part of the gross estate. 

Partner with a certified public accountant

Make sure you understand all of the ramifications of an estate plan by reviewing it with a certified public accountant to ensure it is complete. 

Careful planning with your client will help minimize estate tax liability while ensuring that your client’s wishes are carried out and loved ones are provided for. 

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National Mesothelioma, Asbestos & Injury Law Firm

2600 Eagan Woods Dr., Suite 50 Eagan, MN 55121 Toll Free: 800-620-1829 Phone: 651-304-6708 Fax: 651-437-2732 Eagan Law Office Map