There Are a Few Things You Need to Know About Settlement Planning First.
If you received the good news that you’re going to receive a settlement in your personal injury lawsuit, you probably know things are about to change. Of course, life has already been different since the injury happened. This much-needed income will lighten (or hopefully eliminate) the financial burden that has come from mounting bills and expenses. However, there are a few important things you should know about receiving a settlement before it arrives.
Your settlement could affect your taxes. You will not be required to pay tax when you receive your settlement if the money comes from a lawsuit due to a physical injury, sickness, or wrongful death. Punitive damages are not treated the same way. However, if you invest your settlement money with a financial institution, the proceeds you receive from this interest-bearing account are taxable to you.
Your settlement could affect your eligibility for government benefits. If you receive Supplemental Security Income (SSI) and/or Medicaid to help with monthly income, medical services, and other expenses, you will need to comply with the programs’ rules to maintain eligibility. That may require setting up a special needs trust or another type of account that shows you’re considering these programs’ interests.
You have several settlement planning options. The overarching goal of your settlement should be longevity — to benefit from your money for as long as possible. Some people find trusts are helpful to pay for certain expenses, while others might structure their money to receive regular payments into the future. For many plaintiffs, discussing all available options with their attorney and a settlement planning expert is the best way to come up with a durable plan.
When you have all the information you need, you will be able to make the best decisions possible. My comprehensive settlement planning firm, Milestone Consulting, is available to answer any questions you or your attorney have about planning. Feel free to give us a call to get on the right track.
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).