Q&A with Lishani Sunday: What happens after a personal injury settlement?
The news that you’ve reached a settlement — whether with an insurance company, another business or an individual – is often an incredible feeling of relief. Help — likely in the form of financial help — is on its way.
You might determine to use your personal injury settlement funds to cover medical expenses or therapy. In the case of individuals with severe disabilities, you might use it to provide necessary housing or travel assistance. In the case of family members who have lost a loved one, you might use it to cover funeral expenses, a memorial or even a scholarship or charity donation in your loved one’s name.
However, the check often doesn’t come the day you’ve settled. There is likely processing time and paperwork to come.
At KBG, an attorney will work with you following the personal injury settlement to make sure all paperwork is complete and your check arrives. Personal injury and wrongful death attorney Lishani Sunday explains the settlement process, and what it looks like for clients at KBG.
When an individual reaches settlement, what are the immediate next steps?
Often there is a lot of good news that comes with settlement — you’ve reached a point where you agreed with what the other party has to offer and therefore, your case does not have to go trial.
Once you’ve settled, there will often be release forms you have to sign and settlement paperwork that needs to be processed. Unfortunately, it’s difficult to give a timeline of how long it will take to receive the check because every case is different. Most involving insurance companies will just take a few weeks; there are some complex cases that may take a few months.
How do I proceed with the settlement money?
There are typically two types of payouts from a personal injury settlement – either a lump sum or a structured settlement that guarantees a certain amount over time. It’s always negotiated at the time of settlement and often just depends on how much money you are receiving. If it’s a smaller amount, it’s lump sum; larger amounts tend to be structured.
If you’ve settled on a lump sum, once forms have been processed, a check is typically sent to the law firm. It’s one of the best parts of my job, to be able to call a client and say your settlement check has arrived.
We will provide you with a statement that details all legal fees and expenses incurred, which is then typically deducted from the settlement amount.
Most personal injury and wrongful death payouts will be tax exempt, but if yours is not, you’ll want to meet with an accountant or financial advisor to ensure you are setting aside money for taxes.
Generally, if you are receiving a large payout, it’s helpful to meet with an accountant or financial advisor to help you determine the best use of your funds.
With a structured settlement, the at-fault party will provide payouts into an annuity that will guarantee set payments over a set period of time. They’re beneficial to ensure that money isn’t spent all at once or that a widow will receive regularly recurring lost income over time.
It is your choice to start these payments right away or delay the payments until later date, such as when a minor turns 18 or upon your retirement. As long as the money sits in the annuity, it will earn interest and grow.
How money may be spent
For the most part, injured clients will use personal injury settlement money to pay medical bills directly, or to pay debts incurred from medical bills. It’s often a good idea to set some money aside for bills that are still coming in. Remember, it’s not uncommon to receive a medical bill months after your treatment.
In the instance of clients who have lost loved ones, you may use the money toward funeral expenses, or the debt incurred from those expenses. You may choose to establish a memorial or even set up a scholarship in the name of your loved one. We’ve also seen clients who have donated money to charities on behalf of their loved one.
Ultimately, what you do with your settlement money is most often at your discretion. However, we advise our clients to take care of debts and expenses first and foremost.
If you’ve been injured or experienced the death of a loved one due to someone else’s negligence, contact KBG Injury Law. We’ll fight to get you the Results You Deserve®.