Many of our clients end are awarded large sums of money at the end of their cases, either through settlements or jury decisions. But after the check clears, it can be hard to manage the funds to make sure they last.
Financial matters can be complicated—there are so many different ways to spend, save, and invest the money. So what should you do when you receive a large amount of money after McAleer Law wins your case?
Here are some answers to frequently asked questions that might help.
1. Should money awarded from a lawsuit be received as a lump sum or structured settlement?
If given the option to choose between a lump sum and structured settlement, you should examine your future needs carefully. Lump sums are generally the better choice for those interested in long-term investments, while structured settlements may be the wiser option in specific cases, including:
- Workers’ compensation cases
- Wrongful death cases impacting a surviving spouse or children who will need future income
- Severe or debilitating injury that will require future medical expenses and family support
- Cases involving minors
Some states also allow structured settlements to be sold for lump sums. You should always ask your attorney if one large payment right away, or installment payments over time is the best option for your individual case.
2. Is payment owed to an insurance company after a settlement?
Insurance companies may require reimbursement of medical payments when a settlement is reached. McAleer Law’s work continues after a settlement or verdict is awarded to make sure all medical providers are paid, while closing all loose ends for the client. Often, we are able to substantially reduce or eliminate these reimbursements.
3. How will taxes impact a settlement?
Depending on your unique situation, the Internal Revenue Services may have claim to any money received through a settlement. Generally, settlements for personal injury or illness are not taxable as income by the IRS, but you should always ask your lawyer to help you clarify. The last thing you need is to be on the wrong side of Uncle Sam!
4. How can I wisely invest money earned through a settlement?
Once all expenses have been cleared, you can create a plan for how to spend, save, and invest your money. When it is time to begin allocating funds, some recommendations will help you along the way.
- Don’t do-it-yourself. Unless you have a background in finance, we advise you to build a team of experts that will protect your money and future investments. The National Association of Personal Financial Advisors (NAPFA) is a great resource to secure qualified tax, accounting, and investment professionals.
- Utilize a budget. Using money received from a settlement is great for improving your life, but it should not change it. Sticking to a budget will help you manage and save money, while also avoiding sudden lifestyle changes that could negatively impact your wealth.
- Protect yourself. Money makes people do crazy things, and it is important to protect yourself and your newfound wealth from those that may attempt to take it away. The trusted team of experts you assemble will help set up the roadblocks you need when others learn of your settlement.
As always, when you have questions about best practices for money management after a settlement, visit us at McAleerLaw.com.
About McAleer Law:
McAleer Law—Decatur, Georgia’s preeminent personal injury, worker’s compensation, and Social Security Disability firm—has been representing plaintiffs and injured workers for more than ten years. Specializing in lost wage, medical expense, pain/suffering, lost quality of life, and psychological injury cases, founder Charles McAleer guarantees his clients personal attention, diligence, and unparalleled service quality. For more information on Charles McAleer and the McAleer Law Firm visit www.McAleerLaw.com, “like” McAleer Law on Facebook, or follow @McAleerLawFirm on Twitter.