Legal Question in Tax Law in California

Unless the jury verdict clearly stated what the recovery was on each part of your claim, try to place as much as reasonably possible on bodily injury damages as that is non-taxable to you. Recovery of lost wages is fully taxable. I am not positive as to medical bills that you do not have to pay back [you normally can get the medical carrier to give up a certain percentage by arguing that you only recovered 80% of your actual damages so they should not get a higher percentage than you, or that under the common fund doctrine your attorney is entitled to a reasonable attorney's fee from their recovery since they did nothing to get it -- your attorney should then deduct the amounts he gets from the lien claimants from the fee he was going to charge you, so that you get the benefit of the reduction and he not get a double recovery].

Since you recived a large amount, you should spend a little by seeilng a tax attorney and getting expert advice. Probably from a tax standpoint the best way is to give each a $10,000 gift a year. If you are afraid you will not live long enough to give all of it to them, you can give larger gifts or perhaps set up a trust than can give them tax free gifts. If they do not have their own homes, you might want to buy them; a house and not charge them any rent [technically you wil have to report imputed rent, especially if you take any deductions so the IRS knows that you have rental property]. Sit down with your children and find out what they want done. But rremember if not correctly structured it half might go to the daughter in law tha you do not like and who divorces him, child as they age often turn against their parents or do not have the time to be wiht them much, etc. Almost all attorneys will tell you that it is a bad idea to give all your assets to your children [not stepped up basis on death] because children are unreliable.

not proof read