New York City Personal Injury Law Blog
What should You do with Your Personal Accident Settlement
Posted on Jan 8, 2015 in Personal Injury FAQs
You have just settled your accident case, and now your friends or relatives are asking you for a loan. Your friends are going to know at some point that you have resolved your case by settlement, verdict, or judgment. Invariably, when people know you have received a fair amount of money, they will ask you for a loan.
What to do with the Settlement Amount
When you receive a personal accident settlement, one of the important things you should know is what you should do with that money. Do you invest it, do you save it, do you hoard it, or do you spend it? Since the lawyer who fought your case is not a financial expert, it would be wise to speak to a few financial investors, and then take an educated decision about what you should do with that money.
However, there is one significant option you need to know about, before you even take physical possession of your money. You need to know about something called a structured settlement or an annuity. When you invest in a structured settlement, it means you are not taking all the money at one time. This means you are not going to spend it all or save it all. Instead, you are taking money and getting it paid to you over a period, which is usually over many years.
When you have taken this deal and then if a relative or friend comes to you for a loan, you can easily decline, by saying that you have not receive all the money and you get pain only ever few years. Additionally, this money is already accounted for, and the one who receives it is not permitted to touch the lump sum amount.
Forming a Trust
Another option available to you when you receive settlement amount for your personal injury case is to put the money in a trust. It could be a trust for you, or your family or your children. This way you are not able to touch the money, until certain triggers are met. This is an important point for retaining the money.
When you have put the money in trust, you can refuse requests for loans by explaining to your friends that this money is designed and intended to help you throughout the course of your life and you cannot access it whenever you want. The trust could be designed to pay for your expenses, your children’s tuition, for college, or any other things you or your family could use it for.
Avoiding Disputes & Resentment
When you do not take the lump sum amount of settlement, you do not have to feel bad when you are refusing a loan request from friends and family, as you really will not have that sizeable amount of cash in your bank account. Understanding what to do with the money once you have been successful with your particular accident case or medical malpractice case is vital.
By walking down the correct avenue, you will not only preserve the capital that you have obtained as part of your compensation, but you also can possibly prevent some family or friend disputes which could possibly turn dramatic.