Settlements / Out of Court Settlements

dlambirl

Hi,

Does anyone know if you get a settlement from a court or out of court settlement, what are the implications with this money - do you have to pay tax or anything on it to the government? Does it take long for a settlement to reach the injured party?

McCrack

Depends, if the matter runs to hearing and is successful for the Plaintiff the court will award damages (money), if the matter is settled by agreement before hearing it's withdrawn from court and the agreed amount is the settlement.

Awards are tax-free, if the Plaintiff is a minor (U-18) the money is lodged in the court until they are 18, it also earns compound interest each year too.

dlambirl

Ok, so just to clear it up for me:

If I take a case to court and I am successful and I am awarded for example€50,000 or €500,000 - this is tax free, yes?

If I settle the case out of court and both parties agree the same amount as above (€50,000 or €500,000 for example) - Is this tax free??

JD24

Settlements either made by a Judge at a Hearing of a case or reached prior to Hearing Date i.e. outside of Court are completely tax free regardless of the amount awarded.

dlambirl

JD24 wrote: »

Settlements either made by a Judge at a Hearing of a case or reached prior to Hearing Date i.e. outside of Court are completely tax free regardless of the amount awarded.

Thanks JD24

rochey84

In an out of court settlement how long does it take to get the money to the plaintiff?

Do they have to wait for the date of the hearing or can it happen faster than that?

Example, a case is dated for the courts in November, but settlement talks happening in July, so if a settlement is reached in July, do you have to wait until the judge signs off on the settlement before you get the money?

If not is there a timeline on how long the defendants have to meet to get the money to you?

Kosseegan

Some settlements are taxable. If an employer is sued for wages the amount paid out is taxable as income. If an estate is sued a settlement in lieu is treated as a bequest for taxation purposes.