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Those who have been injured due to someone else's negligence are entitled to compensation for their damages, which include economic and non-economic damages. Winning a personal injury case is excellent news, but victims may be wondering what to do with their settlement money now that the case has been won.
Because settlements often include future damages or expenses, clients need to carefully consider how their settlement money is used. Their attorney can guide them on wise ways to go about using their settlement money.
Those who have not yet spoken to the auto accident lawyers in St Louis at Powell Law Firm should come in for a consultation to discuss their best way forward. Until then, here are some helpful tips for using a car accident settlement.
Contingency Fees
The first thing that occurs after a settlement amount is received is the payment of an attorney for their services. Most car accident attorneys work on a contingency fee basis, which means that they only accept payment when they win the case.
Clients do not receive their settlement checks personally after successfully winning a case. Instead, the court sends it to the attorney’s office. The attorney then deducts their earnings before sending their client the rest of the settlement money.
Determine the Tax implications
Personal injury settlements are often exempt from taxation. However, it may be subject to tax in some cases, whether in part or in full, so it is best to confirm first. Whether the settlement is small or large, it is essential to understand and address the tax implications and keep this amount aside.
This should ideally be the first step to ensure that the money due for tax is not used. The tax money may have to be stored in a savings account for tax season.
Draw Up a Budget to Plan
It is vital to devise a strategy for settlement funds. Without a plan, settlement recipients may end up spending their money more quickly than they would like. Personal injury settlements often accommodate future medical expenses, so if a victim needs medical care, medical costs must be factored into the budget or plan.
One must consider how long the fund is needed. If the car accident resulted in permanent disability, then the settlement must last a long time to make up for the income they would have otherwise earned. Devise a budget or plan that considers medical care, family and personal needs, as well as lost income.
Deal with Liabilities
The best way to use a settlement fund is to pay off all debt. It is a sure way to help individuals become more financially secure and ensure that families always have a roof over their heads. After that, any income brought into the home can be used for living expenses rather than for creditors.
Form an Emergency Fund
This is one of the most important things that those who come into a lot of money can do. It is a good idea to reserve four to six months’ worth of living expenses to use in the event of an emergency. This is particularly essential if the recipient has been seriously injured or disabled in the accident, like from a serious back injury.
Invest in Education
Education is wealth and investing in one's education or a family member's education is a great way to put settlement money to use. Recipients who have children can set aside money for their children's college tuition or pay off their student loans. Investing in education can help achieve financial stability through the addition of new skills and qualifications to a resume.
Get Life Insurance
Many car accident settlements require the victim to agree to waive any future claims against the guilty party, which means that if their injuries worsen in the future, common with whiplash, they must cover the costs themselves. Life insurance can be a valuable tool for ensuring that a victim's family is cared for financially and that their medical expenses are taken care of.
Need a Car Accident Lawyer? Contact Powell Law Firm Today!
At Powell Law Firm, we have seen many happy clients receive their settlement checks. Those who have been in a car accident that was not their fault can contact us today for expert advice and legal representation that is sure to have them wondering what to do with their settlement checks.