Tax Advice Regarding a Legal Settlement
March 15, 2019 7:03 AM Subscribe
Should we get a tax lawyer from our land use lawyer's firm or go outside his firm for outside tax advice?
A group of condo owners, but not a home owner's association, pursued a land use case against a developer. Both sides have agreed to settle, but nothing has been signed. Taxes will be owed on the settlement amount, which is above six figures. The money will be used to repay the legal fees of the condo owners involved in the lawsuit. The rest will be set aside in an escrow to be used for general improvements in the condo development. The owners' lawyer has someone at his firm who deals with escrows, so we'll probably go with that individual if that seems like a good idea.
However, some of us wonder if we should go outside our lawyers' firm for a tax attorney to get an outside perspective on this legal situation before any settlement papers are signed. We like our lawyer a lot, but maybe an outside lawyer would have additional or different advice. Or should we "keep it in the family?"
A group of condo owners, but not a home owner's association, pursued a land use case against a developer. Both sides have agreed to settle, but nothing has been signed. Taxes will be owed on the settlement amount, which is above six figures. The money will be used to repay the legal fees of the condo owners involved in the lawsuit. The rest will be set aside in an escrow to be used for general improvements in the condo development. The owners' lawyer has someone at his firm who deals with escrows, so we'll probably go with that individual if that seems like a good idea.
However, some of us wonder if we should go outside our lawyers' firm for a tax attorney to get an outside perspective on this legal situation before any settlement papers are signed. We like our lawyer a lot, but maybe an outside lawyer would have additional or different advice. Or should we "keep it in the family?"
Does the condo group have an accountant? If not, consider consulting one and ask your lawyer if that would be appropriate. You could look for an accountant that assists nonprofits.
In my Canadian jurisdiction, the usual advice is to consult your accountant on tax matters. Tax lawyers are typically for unusual or novel tax structures or for people already in trouble, rather than for choosing among and implementing typical tax arrangements. Most lawyers don't know much about tax in my experience - they encourage their clients to consult their accountants and they will act to structure things according to the accountant's advice. Tax lawyers are usually quite specialized.
However, if the lawyer being consulted IS definitely a tax lawyer, as Mid says, there is no reason not to trust them unless you have some reason not to. It may be more expensive though.
posted by lookoutbelow at 8:59 AM on March 15, 2019
In my Canadian jurisdiction, the usual advice is to consult your accountant on tax matters. Tax lawyers are typically for unusual or novel tax structures or for people already in trouble, rather than for choosing among and implementing typical tax arrangements. Most lawyers don't know much about tax in my experience - they encourage their clients to consult their accountants and they will act to structure things according to the accountant's advice. Tax lawyers are usually quite specialized.
However, if the lawyer being consulted IS definitely a tax lawyer, as Mid says, there is no reason not to trust them unless you have some reason not to. It may be more expensive though.
posted by lookoutbelow at 8:59 AM on March 15, 2019
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posted by Mid at 7:27 AM on March 15, 2019