Us Louisianans are no strangers to fender benders. From our badly maintained roads to our unpredictable drivers, accidents are an unfortunate inevitability. If an accident results in an injury, our legal system provides a process for the victim to get compensation for their injuries – we’ve all seen the billboards and the commercials! Whether through a settlement, a court judgment, or straight from your insurance company, this compensation will likely come as a check for a large lump sum.
The commercials usually end with a satisfied client taking a big check from a smiling personal injury attorney, maybe even standing on top of an 18-wheeler. But, what happens next? A large and unexpected increase in wealth can be overwhelming, especially when you may still be recovering. Well-meaning family members may step in to help you manage, but too often, inexperience can lead to unintended financial consequences. It’s important to talk to an experienced estate planning attorney to make sure you have a plan in place to protect your funds are there to help you heal.
Here are some essential questions to ask yourself if you are the recipient of a lump sum settlement:
Do you receive government benefits for a personal injury?
If you receive any kind of government benefit, it is imperative that you speak with an estate planning attorney about setting up supplemental needs trust before you receive your settlement.
Many disabled people rely on government benefits like SSI or Medicaid for basic needs like shelter, food, and medical care. Losing these basic needs would have a disastrous impact on the individual’s daily life. If you are receiving benefits, and you deposit your lump sum settlement into your personal bank account, you will be over the program’s asset limit and will likely lose your benefits. Thankfully, you can keep your benefits and keep your settlement money to use for your additional needs by setting up a supplemental needs trust.
Who do you want to help you manage your affairs if you cannot do it yourself because of an injury?
Many people don’t realize that an estate plan is just as important to protect you while you are living as it is to protect your legacy after you pass away. A power of attorney is a document which lets you appoint someone you trust as your agent. Depending on the kind of power of attorney you have, your agent will have the power to make financial and healthcare decisions on your behalf immediately or only after you can no longer make decisions for yourself.
This is vital, because if you become incapacitated without a power of attorney in place, your loved ones will have to go to court and go through an expensive and time-consuming law suit called an interdiction (in other states, this is called a guardianship or a conservatorship.) The court would appoint someone to make decisions on your behalf, and it may not necessarily be the person you would have chosen for yourself. The only way to ensure that someone you trust will be in control of your affairs is to execute a power of attorney while you still have the capacity to do so.
What do you want to happen to your stuff when you pass away?
Now that you have significant assets to protect, you need to consider what you want to happen to your assets once you are gone. A will is a document which sets out who you want your property to go to, and is a good option for many people. However, a will does not protect against probate costs or estate taxes.
A trust is a more advanced estate planning tool which can avoid probate, provide additional protections, and minimize estate taxes. You should talk to an estate planning attorney about which planning technique is right for you.
If you already have a will or a trust, it is important to review it when major changes happen. Receipt of significant assets like a lump sum settlement may warrant some changes to your plan to make sure you are fully protected.
Should you seek professional guidance?
Yes! The best way to make sure your personal injury compensation is protected is to seek competent professional help. A financial advisor, CPA, and estate planning attorney are all folks who you should consider visiting after receiving a settlement. Our legal team Legacy Estate & Elder Law has the experience and expertise to guide you through these important steps to take after a personal injury.
