A diagnosis of mesothelioma is overwhelming, not just because of the medical challenges but also because of the financial strain it can bring. For many, filing a mesothelioma lawsuit is a crucial step toward seeking justice and compensation for asbestos exposure, which is the primary cause of this devastating cancer.
However, a common question that often arises for those pursuing these claims is whether their settlement from a mesothelioma lawsuit will be subject to taxation. An experienced Chicago mesothelioma lawyer at Vogelzang Law is ready to help you understand the tax implications of your settlement so you can manage your financial future more effectively.
Filing a Mesothelioma Lawsuit: What to Expect
When diagnosed with mesothelioma, many individuals face substantial medical expenses, lost income, and emotional stress. Filing a mesothelioma lawsuit is a way to seek compensation for these damages.
Mesothelioma cases usually fall under personal injury or wrongful death claims, depending on whether the lawsuit is filed by the individual with mesothelioma or by their family members after their passing. The process involves several steps:
Gathering Evidence
To build a solid case, your mesothelioma attorney will gather crucial evidence, such as your medical records, work history, and proof of asbestos exposure. Your lawyer will also investigate the companies or products responsible for your asbestos exposure.
Vogelzang Law’s team is skilled at tracking down the sources of exposure, even if it occurred decades ago, since mesothelioma can develop many years after exposure.
Filing the Lawsuit
Once the necessary evidence is compiled, your lawyer will file a lawsuit against the parties responsible for your asbestos exposure. These parties may include asbestos manufacturers, distributors, and employers who failed to provide adequate protection or warnings about the dangers of asbestos.
Negotiating a Settlement
Most mesothelioma lawsuits end in a settlement rather than going to trial. Settlements offer quicker compensation and reduce the emotional and financial toll of a prolonged legal battle. The defendants often prefer settling to avoid the risks and costs of a trial, especially if there is strong evidence of their liability.
Settlement Distribution
After a settlement is reached, the compensation is distributed to the mesothelioma patient (or their family, in the case of a wrongful death claim). A portion of the settlement may go toward legal fees and other expenses, but the remainder is designed to help cover medical bills, lost wages, and other damages related to the diagnosis.
While this process can feel daunting, Vogelzang Law is here to support you every step of the way. Our lawyers understand the emotional and physical toll mesothelioma takes on patients and their families, and we work tirelessly to ensure that our clients receive the compensation they need to focus on their health and well-being.
Are Mesothelioma Settlements Taxable?
A key concern for many mesothelioma victims is whether their settlement will be subject to taxes. The answer to this question largely depends on how the settlement is structured and what types of compensation it includes.
- Compensation for Physical Injury and Medical Expenses: Under the U.S. Internal Revenue Code, settlements for physical injuries or illness are generally not taxable. Because mesothelioma is considered a physical illness, the portion of the settlement that compensates for medical expenses, pain and suffering, and other direct damages related to your mesothelioma diagnosis is usually tax-free. This includes reimbursement for medical bills and compensation for the physical and emotional pain caused by the disease.
- Lost Wages: This portion may be taxable if part of your settlement is designated to compensate for lost wages—from time missed at work due to your illness or from your inability to work going forward. The IRS considers lost wages as income, and as such, they are typically subject to federal income tax.
- Punitive Damages: In some cases, mesothelioma settlements may include punitive damages. These are awarded when the defendant’s actions are deemed especially harmful or negligent and serve as a form of punishment. Unfortunately, punitive damages are taxable under federal law. If your settlement includes punitive damages, you must report this portion on your tax return and pay taxes accordingly.
- Interest on the Settlement: If your settlement includes interest—perhaps because of a delay in payment—this interest is also considered taxable income. Any interest you receive as part of your settlement must be reported on your tax return.
Mesothelioma Trust Funds and Settlement Management
Many mesothelioma patients receive compensation not through traditional lawsuits but through asbestos trust funds. These funds were established by companies that manufactured asbestos-containing products but have since declared bankruptcy. Although these companies can no longer be sued, the trust funds they created allow victims of asbestos exposure to file claims and receive compensation.
How Asbestos Trust Funds Work
Companies that manufactured asbestos were required to set aside funds to compensate future mesothelioma victims. If you were exposed to asbestos by one of these companies, your lawyer can help you file a claim with the appropriate trust fund. Trust fund claims often result in faster compensation than traditional lawsuits, though the payout amounts can vary.
Compensation from Multiple Trusts
In many cases, mesothelioma patients were exposed to asbestos from multiple sources. This means that you may be eligible to file claims with several trust funds, increasing your total compensation. However, filing with multiple trusts can be complex, and a lawyer makes sure your claims are handled efficiently and correctly.
Settlement Funds Management
Once your settlement or trust fund payout is received, the funds must be managed carefully to ensure they last throughout your treatment and recovery. Many victims use their settlement funds to cover medical bills, home care, or modifications, such as making their home more accessible. You may also want to set aside funds for your family’s financial security.
Vogelzang Law can provide resources to help you manage your settlement funds, including advice on financial planning and how to structure your compensation to protect your future needs.
Contact the Experienced Mesothelioma Lawyers at Vogelzang Law
Navigating a mesothelioma lawsuit can be an overwhelming process, particularly while you are dealing with the challenges of a serious illness. The mesothelioma attorneys at Vogelzang Law understand that this is a difficult time for you and your family, and we are here to shoulder the legal burden so that you can focus on your health.
Our lawyers have extensive experience handling mesothelioma cases and are committed to pursuing maximum compensation for our clients. We work with clients nationwide, and our team is well-versed in the varying state laws that may affect your case. Whether you are filing a lawsuit or a claim with an asbestos trust fund, Vogelzang Law will guide you every step of the way, ensuring your rights are protected.
If you have been diagnosed with mesothelioma, it is essential to act quickly, as there are statutes of limitations that limit the time you have to file a lawsuit or claim. Vogelzang Law will help you navigate these deadlines and ensure your claim is filed in a timely manner.
Our lawyers will work tirelessly to help you pursue the compensation you deserve so you can focus on what matters most—your health and your loved ones. Call our main office in Chicago at 312-466-1669 or contact us online.
