So, you won a big settlement check. Now what?
There are two different types of settlements following a lawsuit: a structured settlement or a lump sum. They are pretty self-explanatory, but the lump sum is where you would receive all of your monetary settlement from law offices in Las Vegas in one hit. Structured settlements are regular monetary payments made to you over time as agreed by your personal injury attorney in Las Vegas.
Whichever way you choose to accept your settlement, you will have some big decisions to make. What you do with the settlement check will likely depend on the type of settlement, the amount that you receive, and what's going on in your life at this moment in time.
Now that you have received your personal injury settlement check, and your case is finally over, you're likely feeling a mix of relief and anxiety about what to do next and what happens after the settlement. Perhaps you're thinking “I won a settlement now what?”
Well, the biggest thing that you need to consider now is how to ensure that you don't blow your big settlement check within the next few months. It can happen to a lot of people when they settle, and you want to avoid this outcome for your settlement
What do I do With a Large Settlement Check?
Let's take a look at a few of the things that you could do with your settlement money. If you are worried about what to do, ask the experts at Ed Bernstein & Associates, your Las Vegas accident lawyers. We'll be more than happy to assist! Here's what we usually tell our clients when a settlement agreement resolves their personal injury claim.
Start With Taxes
When dealing with a large sum of money you need to understand how much you are going to be taxed. It's the first thing to consider when you have a large settlement check. Luckily, personal injury settlements are not taxed on the federal level because the money you receive is intended to compensate you for your medical treatment and other losses. This includes economic damages, like medical bills and lost wages. Non-economic damages, such as pain and suffering, are only taxable by the federal government if you suffer physical injuries. Punitive damages, however, are subject to taxation.
States handle settlement money from a personal injury case differently. There is no state income tax in Nevada, so you will pay no state taxes on your settlement money. It's best to talk with a tax professional as soon as possible after receiving a big settlement check to understand what you will have to pay and what you will have left over.
Get Solid Advice
Getting a settlement is a big deal, especially if your settlement process is a long one. Understanding what a settlement is is also a big deal as well. So, what is settlement?
A settlement is an agreement between two or more parties that resolves a dispute, such as a personal injury lawsuit or claim. The agreement usually involves the payment of money by one party (often an insurance company) to the other.
A financial advisor could be the best person to discuss your settlement with, as they can help you to keep a clear head while they assist you with managing your money. The decisions that you make with your compensation could change your financial situation for the better, and without the right advice from someone looking out for your best interest, this could be a big worry on your shoulders. A financial advisor can help you create a plan and a strategy for your sudden wealth. They will be the person who helps you to say “no” in some situations, too.
Wait Before Spending
You don't have to spend all your new settlement money on the day that you get it. It's okay to take a moment and wait. You've been through a rough case, and it's finally at a close. Buy a bottle of wine and just breathe. There's time to evaluate those options in front of you, and you can place the money in a high-interest account while you are deciding on what to do.
Pay Your Lawyer
Contingent fees are important to pay if you aren't involved in a no-win, no-fee case. If you were, the law firm you worked with would collect attorney's fees from your settlement check before passing you the rest of the money. Once your legal counsel has been paid, you can focus on what's left. The stress of what to do with a big settlement check can be daunting, but focusing on paying your legal fees first is a great starting point.
Create a Plan
Sit down with a notepad and create a plan for your settlement funds. If you're still wondering “What do I do after I wing a big settlement check?” then make a list of questions for your lawyer and go from there. If you don't have a clear outline of what you want to achieve with your money, you will spend it faster than you wanted to in the first place. Think about how long you need it to last and about what you may need to pay for it. If your injuries are going to be there for the rest of your life, you need to plan ahead for your care and your medical bills. You may also have goals that will make living with a permanent injury much easier.
Pay Down Debts
A large financial windfall is going to be a relief after the stress of an accident and the legal case afterward. Any medical bills and day-to-day expenses you may have run up while you've been treated for injuries will need to be paid, and it will help you to pay these debts off first. You will need to create an emergency fund to keep in the savings account. This should equate to at least six months of your regular living expenses, keeping you out of debt in the future. Your financial advisor can help you to plan this properly, letting you know how best to invest your money. After settlement agreements, people tend to sporadically spend, but it's very important to pay your debts first.
College Funds
If you have children, or you're planning to have children, put some money aside to pay for their education. You can even pay into an education plan for yourself, too, if you plan to better your future. Higher education is costly and you can protect the educational future of your children or yourself with your settlement check. It's a gift you are giving them and yourself.
Buy Your Home
Do you own your home presently? Pay it off. Use the big settlement check to pay for your home and clear the mortgage. Not only do you have the chance to alleviate the financial burden of a mortgage, but you can also have an additional asset for financial security in your life. Plan this carefully with your financial advisor before you start paying it off, though, just in case you can't cover it entirely.
Reward Yourself
Once you have the money, put aside something for yourself, such as a new car, a vacation, or the costs of adapting your car to suit a new disability. Don't blow the cash, but be smart about how you can also get something for yourself. If planned out correctly, you may be able to buy yourself something new with your settlement check after a settlement is reached.
Have Questions About a Settlement Offer? Contact Ed Bernstein & Associates
If you want some help with your settlement, or you want to know whether the insurance company has made you a fair settlement offer, give our legal team a call today at 702-827-0423, and our Las Vegas personal injury lawyers will be more than happy to discuss your case. If you need information on what happens after the settlement or need more in-depth information on what a settlement is, contact us today.