Settlement & Legacy FAQ.

Under IRS Publication 3920, all payments from the VCF for physical injury or death are 100% federal income tax-free. This includes portions of the award designated for economic losses (lost wages) and non-economic losses (pain and suffering).

• USVSST Treatment: These awards are generally treated as victim restitution; however, you should consult a tax professional regarding any "interest" or "punitive" components of a specific judgment.
• Social Security Disability: SSDI payments received specifically due to 9/11-related conditions are also federally tax-exempt under these same rules.

In the tri-state area, most states follow federal guidelines. New York State explicitly forgives income and estate tax for 9/11-related deaths. New Jersey and Pennsylvania generally exempt these compensatory payments from state-level taxation.

The USVSST Fund officially began rolling out sixth-round payments on January 5, 2026. The Special Master authorized a total of $2.825 billion for this round, with 50% ($1.4125 billion) designated specifically for 9/11-related claimants. As of February 16, 2026, over 90% of eligible claims have been successfully processed.

The Fund maintains specific compensatory damage caps to ensure equitable distribution:

• Individual Cap: $20 million per claimant.
• Family Cap (Direct Dependents): $35 million for family groups consisting of victims, spouses, and dependents.
• Family Cap (Non-Dependents): $20 million for groups including members such as siblings or parents.

The U.S. government has taken control of over 127,000 Bitcoin, currently valued at approximately $8.7 billion (market fluctuation from the original $11.4 billion valuation in early 2026), following one of the largest cryptocurrency forfeitures in history. As of February 16, 2026, firms representing 95% of wrongful death and injury plaintiffs — including Motley Rice, Kreindler & Kreindler (K&K), and Anderson Kill — are actively asserting claims against these assets to satisfy judgments in the Southern District of New York (MDL #1570).

There is currently a "race to the courthouse" with two main points of contention in the SDNY docket:

• Valuation Dispute: Victims argue that restitution should be based on current market value rather than the value at the time of the original loss. While Bitcoin hit an all-time high of $126,000 in October 2025, it has dropped significantly, fluctuating around $68,500 this month. This $6 billion+ drop in total holding value since the 2025 peak creates urgency for settlement architecture.
• Priority of Claims: Law firms are advocating for an equitable split of the assets to prevent a chaotic "first-come, first-served" scenario that could leave some family groups under-compensated.

Federal law provides strict protections for 9/11 families to preserve their net recovery:

• VCF Claims: Attorney fees are strictly capped at 10%.
• USVSST Claims: Fees and costs for 9/11-related victims are capped at 15% of the payment.
• Non-9/11 USVSST Claims: Fees for other terror victims are capped at 25%.