My client has received a personal injury settlement. How can a Personal Injury Settlement Consultant help me strategize about other factors such as taxes, estate planning, and investing?
by: Begley Admin
The previous discussions went over the importance of a Personal Injury Settlement Consultant and other benefits. This blog highlights additional factors to be considered, including:
• Medical Coverage. Medical coverage is often a big issue for plaintiffs in personal injury cases, because they have preexisting conditions. A Personal Injury Settlement Consultant, such as Begley Law Group, may be helpful in navigating this system.
• Estate Taxes. When a significant amount of money is recovered in the settlement, federal and state estate and inheritance taxes need to be addressed. Currently, there is a federal estate tax exemption up to $5 million, and this is scheduled to remain in effect for the calendar years 2011 and 2012. Unless Congress acts, the exemption is scheduled to be reduced to $1 million in 2013. Many states, such as New Jersey, have state estate taxes. Currently, the exemption from New Jersey estate tax is $675,000, and that exemption is not likely to increase. Other states, such as Pennsylvania, do not have a state estate tax, but do have significant inheritance taxes. In Pennsylvania these taxes can be as high as 15 percent. The Personal Injury Settlement Consultant will see if the client’s life insurance is can pay for all or part of the tax.
• Estate Planning Documents—Person with Disabilities. Many injured plaintiffs are disabled but competent and have no Living Trust, Living Will, Will, Power of Attorney or other estate planning documents. Some that do have these documents have not updated them, especially after the personal injury settlement monies are transferred. These documents should be reviewed and modified or replaced as needed. In many states it is not possible for a court to do estate planning for a minor. In those states, a Special Needs Trust is often drafted to give the beneficiary a power of appointment over the trust proceeds upon death. It is important to calendar the beneficiary’s 18th birthday in those situations to be sure that a will is drafted specifically exercising the power of appointment given in the trust document. This is especially important where one parent may have virtually abandoned the disabled child.
• Estate Planning Documents—Parents. If the plaintiff is a minor child who is likely to receive means-tested public benefits, it is important that the parents’ estate planning documents not leave any assets to the disabled child, but rather to a third-party special needs trust.
• Investment Advice. The client should seek an investment advisor to strategically invest the settlement proceeds. In some cases where it is appropriate, the investment person can be a professional trustee.
To learn more, visit the Begley Law Group website at www.begleylawgroup.com.