Your personal injury case is finally settled. And what’s more, you received considerable monetary compensation for your damages. That likely has you thinking about what you could do with your settlement money. If you are concerned about how to best use those funds, read on!
You May Want to Start With Taxes
When you receive a substantial award of money, you need first to understand how much you are going to be taxed on it. It’s likely the first thing you’ll want to think about when it comes to managing your settlement money. Paying taxes can be one of the best things to do when you have a large sum of money, especially since most settlements will be subject to income taxes. However, exceptions to this exist, as personal injury payments are excluded at times. Your settlement award may be subject to income tax demands if the claim includes:
- Lost profit
- Breach of contract
- Punitive damage
- Back pay
- Copyright infringement
Once you’ve paid any taxes you will owe, you can better understand what you have left over to work with from your settlement funds.
Get Some Sound Financial Advice
Getting a settlement is a significant event, especially if the case has been long and arduous. A financial advisor might be the best person to discuss your settlement with, as he or she can help you to keep a focused and clear head while they assist your settlement funds management. Not surprisingly, the decisions that you make with your settlement funds could change your life. Therefore, without the right help and advice, you could have big worries on your shoulders. A financial advisor can help you strategize and create a plan for your sudden increase in wealth.
Consider Waiting Before Spending
It may be tempting, but you don’t have to spend all your new settlement money right after you get it. It’s okay to take some time and give it some consideration. Indeed, you’ve been through a rough time, and it’s finally at an end. Take the time you need to make the appropriate decisions about where to spend the money. There’s plenty of time to evaluate your options, and you can always put the fund in a high-interest account while you are deciding where you want to put it long term.
Remember to Pay Your Attorney
If your personal injury case were represented on a no win, no fee contingency basis, your attorney would probably take their percentage cut from your settlement before passing you the rest of the money. If not, it’s important to pay your attorney whatever he or she is owed. Once you deduct the funds required to pay your legal fees, you can focus on what’s left.
Devise a Plan
Sit down and create a plan for your settlement money. If you don’t have a clear idea outlined for what you want to achieve with your funds, you will probably spend it much more quickly than you intended to in the first place. You would do well to take into consideration what you may need it to pay for and how long you need it to last. If your accident-related injuries are going to be there long-term or for the rest of your life, you will need to plan ahead for your medical bills and care. You may have goals that will make living with a disabling injury much more comfortable, as well.