After winning a personal injury lawsuit, you’re likely to experience an overwhelming sense of relief. You’ve finally secured the much-needed funds that you were entitled to and you can close out this difficult chapter of your life.
Now, there’s more important work to do: it’s time to engage in estate planning in order to ensure that the money you’ve received is properly managed. Now that you’ve received your payment, your new objective is to ensure long-term financial security for you and your family.
Estate planning is the process of preparing for the transfer of your assets to family members or other entities after your death. Estate planning can be performed in conjunction with retirement planning in order to achieve maximum benefits for both you and your heirs.
In this guide, we’ll navigate the post-payment landscape for lawsuit winners. Here are a few key considerations for estate planning after receiving a payment from a lawsuit or settlement.
You May Receive a Life-Changing Sum of Money
The lump sum received after winning a lawsuit is often a life-changing amount of money. This windfall is exciting, but managing your new financial reality can also be overwhelming. It’s easy to make mistakes, underestimating or overestimating your new set of financial possibilities.
In this scenario, you’ll benefit from working closely with an experienced estate planning lawyer. If your finances have changed dramatically from one day to the next, your lawyer will help you navigate the legal and financial challenges that come with your newfound wealth.
You’ll Need to Create or Update Your Estate Plan
An estate consists of all of the assets that make up a person’s net worth, including financial accounts, life insurance, real estate, and possessions. Estate planning involves creating or updating your will, forming trusts, and making power of attorney designations.
Everyone has an estate, and everyone should engage in estate planning.
After winning a personal injury lawsuit, estate planning becomes even more critical. Your assets may have quickly become more vast and complex, raising the stakes for each estate planning decision you make.
If you don’t yet have an estate plan, it’s important that you create one after concluding your lawsuit or settlement negotiations. If you have one, it should be updated to include decisions about your new funds.
You’ll Need to Make Decisions About How to Use Your New Money
Estate planning is especially important after winning a personal injury lawsuit because you’ll need to make decisions about how to use your new money. You’ll have to decide how much to spend, save, and invest, and what sort of financial products to acquire.
While it may be exciting to consider what your money can do right now, long-term planning is essential. Smart decisions you make now can help ensure a comfortable retirement for yourself and a meaningful inheritance for your family.
For example, if you want to create trusts to impart portions of your new wealth to your descendants after your eventual passing, a lawyer can assist you in creating them. This will ensure that money remains set aside for those that you love and can help you contribute to their well-being when you are no longer able to.
You May Have to Make Payments to Creditors
During your injury recovery and lawsuit proceedings, you may have accumulated creditors who need to be paid after you receive your payout. These may include medical providers, lawyers, and other professionals who provided services related to your case.
Payment details will have been worked out beforehand, but executing the payments correctly may still be a detailed process. During your estate planning, be sure to consider all of your creditor payments to ensure that your records and projections are thorough and accurate.
Your Taxes May Be More Complicated
Some personal injury cases result in life-changing sums of money. Often, this means that your tax planning becomes unrecognizable. The money you received may be taxable and you may be moved into a new tax bracket that demands a much larger portion of your income.
Along with taxes on your payout, you’ll likely face tax scenarios that you aren’t used to, such as taxes on new investments. As you learn to manage your complicated tax burden, it’s important to work with an estate planning attorney who has experience with managing large lump sum payouts.
Get Estate Planning Help in North Carolina After Winning Your Personal Injury Case
At Curcio Anderson Law, our estate planning experts put clients first. If you need to update your estate plan after concluding a lawsuit or settlement, we’ll help you understand your options for important tasks like creating a will and designating power of attorney.
To learn more, contact Curcio Anderson Law today.