ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Monday, October 21, 1996 TAG: 9610230004
SECTION: MONEY PAGE: 6 EDITION: METRO
COLUMN: Money Matters
SOURCE: MAG POFF
Four Roanoke lawyers, F. Rodney Fitzpatrick, Charles E. Troland Jr., J. Rudy Austin and Thomas A. Leggette, all called Money Matters last week to report that the law on taxation of court awards was changed Aug. 20. An answer given Oct. 14, therefore, was incorrect.
Troland, who is with the firm of Glenn, Feldmann, Darby & Goodlatte, gave the following written summary:
* Compensatory damages for physical injury will not be included in income for tax purposes.
* Other compensatory awards will be included in income.
Punitive damages will be included in income.
These changes were part of the Small Business Job Protection Act of 1996. It applies (with some exceptions for awards in effect before Sept. 13, 1995) for amounts received after the date of enactment.
Troland said emotional distress is not considered a physical injury for purposes of the exclusion from income, except for amounts spent for medical care attributable to the emotional distress. Punitive damages will be included in income, whether or not they are related to a claim for damages from personal injury or sickness.
Any person who has received a damage award from a court or jury might consider consulting a tax advisor to handle his or her own specific situation.
Boning up on financial matters
Q: I am a young man with an underdeveloped awareness of financial dealings such as mortgages, inflation, stocks, bonds, interest rates, credit, etc. I wish to improve my understanding in these matters.
Going to school is not possible at this time, so what I'm looking for is a way to educate myself on the basics of these subjects in my spare time. Do you have any recommendations or suggestions?
A: Schools usually don't teach these subjects unless you are seeking a college degree in finance. You will find many seminars and "courses" around town, but these are usually sponsored by companies whose main purpose is to sell you something that carries a high commission for them.
You should read financial newspapers and magazines in your spare time.
The Wall Street Journal, for instance, prints a lot of financial news and has a special section dealing with personal finances and investing. Money magazine contains a lot of readable material on all of the subjects you mentioned. Those two publications would give you a good background in your spare time.
If you are interested in business as well, you might also look at Forbes, Business Week and similar magazines.
Compensation for estate administrator
Q: I have been appointed by a court as the administrator of a small estate with a value of about $43,000. My work will include selling a car and a small house, which I plan to handle myself. The deceased had no will, so the remainder of the estate, after the hospital and funeral bills are paid, will be divided among 17 heirs.
What fee or commission is allowed by the laws of Virginia, and how is that figured?
A: Ross Hart, a specialist in wills and estates with the firm of Hart & Hart, said the general rule is that the administrator is allowed a fee of 5 percent of the amount of funds handled. Under this rule, you would be allowed 5 percent of the $43,000 estate.
Virginia has no statute governing this fee, Hart said, but 5 percent is the custom in this state.
When you were appointed, Hart said, the court assigned a commissioner of accounts to review your work. This commissioner will approve your fee when you present your accounts for his or her approval.
But Hart warned you that you cannot sell real estate without court approval. Only a deceased who has written a will can provide for the sale of real estate without court approval. This is one of many reasons that people should write wills. Because your deceased had no will, you have no authority to sell the real property.
He urged you to get a lawyer to handle the court procedure for approving the sale of the real estate. Find a lawyer who is experienced in handling estate work, Hart said, and retain him or her on an hourly basis. Use this lawyer only for getting court approval of the property sale and answering your questions.
Take care in how you handle this estate, Hart said. With 17 heirs and such a small estate, one or more of the heirs may very well become disgruntled and call your work into question.
LENGTH: Medium: 86 linesby CNB