Legal Question in Wills and Trusts in Pennsylvania

You do not post enough details. What was the settlement for? Any settlement that is related to injury or death and is compensatory (payments for medical bills, pain and suffering) usually is not taxable. Awards that are based in part on punitive damages or for emotional distress (which is a separate cause of action) may be taxable . I suggest that your father either discuss it with the personal injury attorney or his CPA.

As far as state taxes go, wrongful death proceeds are awarded as a result of a family member's suit against someone. The money awarded goes directly to the beneficiaries so it is not taxable. Survival actions are different. These are actions which would be brought by the dead person or the dead person's estate. Any recovery here would go into the estate and would be subject to inheritance taxes.

Again, your father needs to speak to the personal injury attorney and/or the probate attorney for the estate and his CPA. The CPA needs to be a real CPA, not H&R Block or some other tax place and the CPA needs t o be familiar with PA and federal inheritance taxes and the taxability of wrongful death and survival proceeds.