What Is Settlement Resolution Planning?
Settlement resolution planning is the process of establishing a strategy to preserve and protect the funds received as compensation in the settlement of a lawsuit or legal claim for personal injuries suffered by the victim of another party’s negligence.
Personal injury lawyers are specialists at ensuring injured victims receive the maximum possible financial compensation for the life-changing injuries inflicted on them by the careless or reckless conduct of others.
When an insurance company or other liable party pays a large sum of money to settle a personal injury claim, those funds can cause unintended negative consequences to the injured party if they are transferred directly to the injured person.
Why Do You Need to Plan a Personal Injury Claim Settlement?
For someone whose life was devastated by the negligent act of another person, the damage could be compounded by receiving their personal injury settlement fund in the wrong manner. Someone who is totally or permanently disabled is entitled to receive substantial financial benefits from the federal and state governments.
Federal and state benefits for disabled persons are often needs-based. That means if you have too many financial assets, you would be ineligible to receive Medicaid coverage for healthcare expenses, nursing home costs, prescription drugs, and other valuable benefits.
In planning how best to structure a large personal injury settlement, you, your personal injury lawyer, and your settlement planning attorney can consider these issues?
- Is long-term nursing care in a residential facility likely? If so, when?
- Are any needs-based government benefits available?
- Is the person disabled to the extent a responsible trustee is required to manage the funds?
- Is the settlement for a minor child?
- Will the funds be needed for higher education?
- What future medical expenses are expected?
- Is there an effective, long-term plan for health insurance coverage?
- What are the tax advantages and disadvantages of particular settlement structures?
How Can Settlement Planning Help?
Needs-based public benefit programs consider only assets owned by the applicant when assessing their eligibility to receive benefits. An attorney experienced in settlement planning can draft and create a trust into which the settlement funds would be deposited for the exclusive benefit of the injured person. Referred to as a Special Needs Trust, the trust is the legal owner of the assets. The large sum of money deposited is not an asset belonging to the injured benefit program applicant.
By preserving the disabled person’s continued eligibility for benefits, the funds deposited in the trust for their benefit can be used for any uncovered needs related to their physical or mental health and the enrichment of their lives. Funds held in the trust could be available for uninsured medical equipment, home adaptation construction, transportation, education, clothing, travel, and entertainment.
Creating a trust to receive settlement funds can also protect the injured plaintiff from the impulse to spend the funds quickly in whirlwind buying spree. Such a trust is called a Spendthrift trust and is intended to allow the trustee to distribute the funds as directed in the trust document.
Severe Injury Claims Are Most in Need of Settlement Resolution Planning
In cases of severe injury, the size of the settlement is often high because the funds are required to provide necessary care for the injured claimant for many years, perhaps for the rest of their life. Only by prudent management of the settlement funds will they last, and maybe grow, for the long-term benefit of the trust beneficiary.
Early collaboration between your personal injury lawyer and an experience Settlement Resolution Planning attorney will ensure you are offered the widest range of options as to how best to protect your settlement dollars.