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A Note to Personal Injury Attorneys: Don’t Neglect Settlement Planning


Congratulations! You’ve settled your client’s personal injury case. This likely marks the end of a long and arduous litigation process. While the litigation is behind you, now you must take the next step: helping your clients secure their financial future and ensuring that the funds they receive do not negatively impact eligibility for public benefits.

To avoid the possibility of your client’s settlement funds being mismanaged or causing them to lose need-based benefits such as Medicaid or public housing  – not to mention the possibility of a malpractice claim if you fail to properly advise them – always consult with a settlement planner before releasing settlement funds to your client. An experienced settlement planner can help you and your clients avoid the pitfalls of legal settlements:

Eligibility for Public Benefits

Many personal injury victims suffer from a permanent disability that impedes their ability to earn an income. As a result, they may need their settlement funds to last a lifetime. Preservation of benefits such as Medicaid (MassHealth), Supplemental Security Income (SSI), or public housing can help make sure this happens. Public benefit programs have complicated asset and income requirements, and the receipt of settlement funds can jeopardize your client’s ability to maintain or apply for benefits in the future. A settlement planner can advise on trusts or other arrangements that allow your client to benefit from the settlement funds, while maintaining eligibility for much-needed benefits.

Financial Planning

In some cases, a plaintiff receiving a large legal settlement may lack basic money management skills. These clients will need help understanding how to best invest and preserve their funds over the long-term. Proper settlement planning will include a qualified financial professional who can help your client identify and meet his or her long-term financial goals.

Estate Planning

Your client should have a comprehensive estate plan in place to provide for how his or her funds will be distributed at death, and to appoint trusted individuals to make their financial and medical decisions if they become incapacitated. Depending on your client’s situation, important estate planning considerations may include estate tax planning, long-term care planning, and planning for minor children.

Annuities and Structured Settlements

While the numbers offered by structured settlement brokers may look appealing, using an annuity may mean locking in a low interest rate for a lifetime. Annuities should be considered only in the context of a long-term financial plan, and with the advice of a qualified financial professional. Annuities paid directly to the client may make them ineligible for vital public benefits, undermining their benefit.

Special Needs Trusts

Special needs trusts often can solve many of the challenges discussed above, providing a combination of professional financial management and continuing eligibility for necessary public benefit programs. Whether to fund a third-party, (d)(4)(A) or (d)(4)(C) trust depends on each client’s individual situation.

Depending on your client’s situation, other planning considerations may include obtaining court approval for the settlement, resolving liens from Medicaid, Medicare or private insurers, and tax planning. An experienced settlement planning firm will help you take that next step after settlement to secure your client’s future.

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