California is joining the ranks of New York, New Jersey, and Arizona in better protecting victims of sexual abuse. The new state law, signed by Governor Gavin Newsom on October 13, gives victims of childhood sexual abuse until age 40 to file civil suit against their attackers — a 14-year increase from the previous limit of age 26. Adult survivors now have five years after discovering the abuse to sue — an increase from the three-year discovery rule. The law will also suspend the statute of limitations for three years beginning January 1, 2020, so victims of all ages who wish to file a lawsuit may do so during that three year span.
Better laws for sex abuse victims catches on
The change in California law comes on the heels of similar recent changes in New York. On January 25, the NY State Legislature passed the Child Victims Act, which allows people who were victimized as minors to seek prosecution against their abusers until age 55 in civil cases in New York, more than doubling the state’s previous time limit of age 23. Those pursuing a criminal case against their abusers now may do so until age 28.
The New York Child Victims Act also opened up a one-year window from August 2019 for victims of any age to come forward to prosecute their abusers. More than 400 lawsuits were filed in New York State on just the first day of that one-year window.
In addition, New Jersey raised the age to 55 earlier this year, and this spring Arizona passed a bill that extends the amount of time victims have to take civil action against perpetrators of child abuse from two years to 12 years, allowing victims to pursue justice up to the age of 30. The bill also allows victims who did not have the opportunity to take civil action for their abuse due to the previous two-year limit to bring a claim against their perpetrator until December 31, 2020. In addition, the bill allows civil action to be taken against an organization that knew or had notice of the sexual misconduct.
Important tax implications for sexual abuse settlements
Sex abuse victims face unique hurdles come settlement time. Unlike settlements from traditional injury lawsuits, which are not taxable, settlements involving sexual harassment and abuse may be taxable under President Trump’s tax reform law. According to Section 162(q) of the tax code:
(q) PAYMENTS RELATED TO SEXUAL HARASSMENT AND SEXUAL ABUSE. — No deduction shall be allowed under this chapter for — (1) any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement, or (2) attorney’s fees related to such a settlement or payment.
The new law means that sexual abuse victims will not be able to deduct their attorney fees if they receive a settlement. It simply adds insult to injury.
We at Milestone are glad to see that states are beginning to offer sexual abuse victims more time to seek justice against those who committed these heinous acts. Our team works with plaintiffs who want to ensure their monetary recovery is beneficial for as long as possible. When the civil justice community comes together to better protect Americans from wrongdoers, our team is ready to provide the best financial planning services as those plaintiffs pursue justice. Visit milestoneseventh.com to learn more.
A West Point graduate where he served as captain and military aviator, John Bair continues his commitment to our country through his efforts within the settlement planning industry. He has represented families of victims lost in the Flight 3407 crash, offered pro bono services to the families of 9/11 victims and drafted the first consumer protection bill for plaintiffs (H.R. 3699).