A lot of folks feel like personal injury settlements are big enough allotments to retire off, without a care in the world. The truth is that not all personal injury victims receive large financial settlements, and many victims have expenses and costs that they’ve potentially been waiting years to be reimbursed for. In particular, oilfield workers who have been injured on the job might not be able to support themselves or their families anymore. When a person no longer can provide an income, they have to look at the total amount of money they’ll need to support themselves for life. Additionally, injury victims have medical costs and sometimes lawyers’ fees that have to be paid upfront. Here’s how the recipient of a personal injury settlement can manage his or her money for a lifetime.
Get an Accountant
Personal injury settlements can be subject to taxes on a federal and a state level. Anytime you receive a large payout you have to be prepared to shave off a big chunk so that you can satisfy your obligation to the IRS. Hiring an accountant will not only keep you from paying compounding interest and penalties on unpaid tax bills at a later date, you can learn about what financial vehicles may aid you in getting more out of your personal injury settlement. If you were to invest $700,000 in the right kind of investment account the interest you earn alone would be enough to live comfortably. Talk to an accountant before you spend a penny of your personal injury settlement funds.
Set Up Investment Accounts
Should you set up an IRA or start by buying ETFs? Would it make sense to buy a lot of CDs after winning a personal injury settlement or should you just keep your money in a high interest savings account? If you’ve talked to an accountant, you already have some information about the best investment vehicles you can use to grow your money. On the other hand, conferring with a financial advisor and even your lawyer will help you to get even more insight into maintaining your personal injury settlement funds. You’re also going to need to account for unexpected expenses so try not to tie up all of your funds into long-term investments.
Plan for the Unknown
Whether you expect to be in physical therapy for the next five years or are going back to school so that you can be in a different career, there’s going to be other costs that pop up from time to time. A tropical storm could force you out of your home for months or your car could need a lot of work unexpectedly. Keep some cash reserves available so that your life is as comfortable as can be after being permanently injured in a serious accident.
Every victim who is awarded a large personal injury settlement deserves the money that is received. At the same time, the courts have no control over how the money is spent or how quickly it dwindles away. Have a plan to manage your personal injury settlement funds and you will always be able to take care of yourself.