Settling a personal injury lawsuit can take a long time, and it’s no surprise that the end of the process is often met with relief by injured parties who are anxious to collect their award for the pain and suffering they have experienced.
Yet for a person who has special needs or disabilities, receiving a personal injury settlement must be done with extreme caution. The following is an overview of information that we discuss with our clients before they successfully settle any personal injury suit.
The Amount You Settle For Is Not What You Will End Up With
This is may seem like an obvious point but it’s one that injured parties lose sight of as their case drags on for months or years. The injured person may jump at the chance to accept an offer from the defendant, thinking that the amount is sufficient to meet their current and future needs. However, it’s important to remember that the amount of the settlement isn’t the final amount that you will actually receive. Attorney’s fees and other expenses are usually deducted from the settlement funds, so you’ll want to make sure that what’s left over is going to cover your financial interests now and in the future.
The Pros and Cons of a Structured Settlement
Structured settlements are common in personal injury lawsuits. A structured settlement allows for a long-term stream of payments rather than one lump sum right away. A series of payments spread out over a longer time period may be best in some situations. However, if your financial needs are immediate, a structured settlement may not be the best option. For example, home renovations needed to accommodate a wheelchair or the need for medical equipment would require immediate funding. In this case, a lump sum payment would be more appropriate. Ask your personal injury attorney about your options for a structured settlement, a lump sum payment, or a combination of the two.
Your Personal Injury Attorney Should Consult with a Special Needs Planning Attorney
An attorney who specializes in personal injury is usually going to be focused on getting the maximum amount possible for their client. How that money is managed, on the other hand, may fall outside of their area of expertise. If your personal injury attorney isn’t experienced with handling lawsuits involving someone with a disability, consult with a Special Needs Planning attorney who can assist with legal planning, including setting up a First Party Special Needs Trust for the settlement funds so that you are not in danger of going over asset limits for Medicaid or Supplemental Security Income (SSI). Setting up a First Party Special Needs Trust to manage the settlement payments allows the individual to maintain their eligibility for these benefits.
Consider an ABLE Account
Another option for managing the funds from settling a personal injury lawsuit within a certain dollar amount is an ABLE account. ABLE accounts allow people with disabilities or their families to set up a tax-free savings account without leaving them ineligible for government benefits like Medicaid or SSI. This type of account was created under a federal law referred to as the Achieving a Better Life Experience (ABLE) Act. While ABLE accounts are less complicated than a Special Needs Trust, they aren’t as flexible and they do have stricter eligibility requirements.
Bottom Line: Make Every Decision in Consultation with a Special Needs Planning Attorney
What may seem like financial relief when receiving a personal injury settlement can actually cause future problems and headaches that people with disabilities and their families must work to avoid. If you anticipate receiving a settlement and want to ensure that you are not making any of these common mistakes, and that you are prepared to receive the funds in the smartest and safest way possible, we encourage you to contact us to schedule an appointment.