What is the current state of the law on a lump sum award for costs of future care?

The next step in the development of this law was the recognition that the income earned on the lump sum award for costs of future care would be taxable. Once the tax was paid on the fund's income, the remainder would be insufficient to provide for the future costs when they were incurred. Accordingly, the case law acknowledged the need to increase the lump sum award by an amount sufficient to pay income tax on the fund's income and to leave intact a fund sufficient to pay for the future costs as they were incurred. This is the concept of "tax gross-up." (Watkins v. Olafson, 1989 CanLII 36 (SCC), [1989] 2 S.C.R. 750.)