At the end of a personal injury case, an injured victim may be awarded a large sum of money. Depending on the circumstances in the case, that award could be worth millions of dollars. For some people, that is more money than they have ever had in their life. Therefore, it may be a good idea to hire a financial adviser to help manage that windfall.
That May Be the Last Paycheck You Ever See
If you are unable to work because of the injuries in an accident, the settlement or jury award that you receive may be the only money that you receive for the rest of your life. Therefore, you will need to make that cash last for however much longer you expect to live. A financial adviser may be able to help you invest that money to ensure that you have enough to live on for the next several years or decades.
The Money Could Be Subject to Taxes
The money that you receive could be subject to state and federal income taxes which will reduce the amount that you actually get to spend. With the help of a financial adviser, it may be possible to put the award money into tax-efficient entities that reduce this burden. It may also be possible to transfer it into investments that produce income that is taxed at a lower rate or is exempt from taxes altogether.
The Settlement Could Jeopardize Access to Government Benefits
By putting the money into a trust, it may be easier to retain access to government benefits such as social security disability insurance. You may also find it easier to access Medicare or Medicaid benefits by keeping settlement money separate from your estate. Typically, you can put the money into a living trust, which gives you control of your money without having to use it to repay the government.
Keep the Money from Creditors
In most cases, the money that you receive from a personal injury settlement can’t be seized by creditors. However, putting your money into a trust might make it more difficult for anyone to access it for a past due debt. Depending on what the debt is and who the creditor is, an irrevocable trust may offer the most protection.
Pass the Money to Future Generations
A financial adviser may be able to explain how to pass money from a personal injury settlement to future generations. Once again, you may opt to put the money in a trust as it gives you more control over how it is used. However, it may be possible to include provisions for how the money is to be transferred in your will.
If you keep your money in a bank or in an investment portfolio, you will likely have the option to name your children or others as beneficiaries to those accounts. In this scenario, your beneficiaries generally do nothing more than present your death certificate to have the account transferred into their name.
While no one wants to be hurt in an accident, it could result in a significant financial award. To ensure that the money is able to last as long as you do, it is important to talk with a financial advisor such as the Financial Advisor Gaithersburg MD locals trust. This person may be able to give you many different tips and strategies to help you make the most of the rest of your life.
A special thanks to authors at CIC Wealth Management for their insight into Financial Advising.