Answering this question is complicated because it really depends on what is best for your personal situation and only you will know what’s best for you–with some guidance from a qualified legal expert of course. If you were the recipient of a sizable personal injury settlement and are not quite sure how to proceed when deciding on estate plan options, then call an experienced estate planning firm for help. That’s always the first step.
The reason one might ask whether an estate plan is necessary after receiving a personal injury settlement is simple enough: such an injection of cash can affect the assets you already have, and it can definitely impact how you might like to split them up in the event of your death.
If your estate is on the smaller end, you might find yourself exempt from state and federal taxes. If that estate exceeds $5.49 million (as of 2017), then you have to send away a fair portion to Uncle Sam’s Federal Treasury and require a plan. If your personal injury settlement pushes you beyond that exemption cap, then your financial situation has changed enough that you must update your estate plan to reflect the greater amount of money. Depending on the state in which you live, you might owe a little more on top of that. Such is the price of freedom.
Part of estate planning is knowing exactly what your assets are versus how your regular expenses affect those assets. If you were injured as the result of an accident and then compensated for that accident, then there is the likely possibility that your expenses (such as medical bills) have changed as a result. Your estate plan needs to be updated.
Of course, if you’ve acquired any amount of money for any reason, then you may want to change how you invest your current and future assets. The richer you are, the easier more wealth is to achieve (as they say). An estate planning expert can help explain the value of adjusting your finances in order to gain more and spend less.
After all is said and done, the reasons behind your personal injury settlement may affect the status of your estate as well. If you were permanently disabled, then perhaps someone else might be better suited to making decisions on your behalf. You may need to rethink your last will and testament, and power of attorney, among other things.
Some of these decisions are mandatory, and changes must be made to your estate plan as the result of your personal injury settlement. Other decisions are optional, and how best to proceed is entirely up to you. No matter what you decide, your assets will be in good hands with the help of proper legal counsel. Be sure that the ins and outs of estate planning have been properly explained to you before you decide on any course of action, and know that you can distribute your assets with confidence after that is done.