If you suffered one or more injuries that were caused by the negligence of another party, you have the right to seek monetary damages to cover economic and non-economic costs. Filing a civil lawsuit can get you the financial relief you need to move forward with your life. Even if you decide not to file a civil lawsuit, you should lean on your insurance company to compensate you for expenses such as medical bills and repairs to property damage.
Filing a civil lawsuit does not mean you spend time inside a courtroom litigating your case. The Bureau of Justice has released data that shows a majority of personal injury claims are resolved before a judge slams down a gavel for the first time during a courtroom proceeding. This means both parties agree to a financial settlement or the plaintiff decides to no longer litigate a personal injury lawsuit.
Negotiating a settlement to your personal injury lawsuit saves you both time and money. You do not have to spend time attending courtroom proceedings, as well as you do not lose income because you are unable to work. Reaching a financial settlement often is the best strategy for a plaintiff to take during litigation for a personal injury case. However, staying out of a courtroom does not answer one important question.
What do I do after I win a settlement?
You should look at a personal injury settlement the same way someone views the financial gain of winning the lottery. Although the amount of money you win in a legal settlement typically pares in comparison to what a lottery winner earns, you have to take several of the same steps to ensure you benefit from the financial victory.
At Morgan & Morgan, we have more than three decades of experience helping clients gain what they deserve in just compensation. Our experienced team of personal injury attorneys negotiates favorable settlements that allow our clients to move forward with their lives. In addition to our unmatched legal expertise in litigating personal injury cases, we also advise our clients on how to best manage their financial gains.
Schedule a free case evaluation with a Morgan & Morgan personal injury lawyer to learn more about answering the question, “What do I do after I win a settlement.”
What Is a Legal Settlement?
A legal settlement can take place under two conditions. First, you settle an insurance claim for a personal injury incident. Settling with an insurer typically gets a policyholder money much faster than extending the claim process. Second, you settle a civil lawsuit when your personal injury attorney negotiates with the other party’s lawyer.
In either case, a legal settlement represents a formal and legally binding agreement that ends a personal injury dispute. Both parties sign off on a deal, which means the plaintiff agrees to end the legal dispute in exchange for a designated amount of compensation. You can reach a legal settlement by negotiating with the other party directly or by having a mediator oversee the negotiation process.
What Does a Settlement Check Cover?
Knowing the answer to the question, “What do I do after I win a settlement” begins by understanding the different types of monetary damages awarded in a personal injury case.
Special Compensatory Damages
Considered economic damages that directly relate to a personal injury incident, special compensatory damages cover the costs of tangible expenses such as medical bills and the repairs done to property damage.
Medical expenses by far represent the largest category of special compensatory damages. You have the right to ask for money to pay for diagnostic tests, treatment programs, and physical therapy sessions. Special compensatory damages also cover the cost of prescription medications and the device you need to move around without any assistance from another person.
Another large category of special compensatory damages concerns property damage. This is especially true for incidents such as a car accident. Damage to your vehicle can run into thousands of dollars, which initially you have to pay for out-of-pocket. You also have the right to seek compensation to cover the wages lost because your injuries make it impossible to work.
General Compensatory Damages
Not every cost associated with a personal injury incident generates a price tag. General compensatory damages, which refer to the non-economic costs of suffering from one or more injuries, address issues such as acute anxiety and prolonged bouts with emotional distress. Because there is not a price tag connected to general compensatory damages, your personal injury attorney must come up with a reasonable sum to get you the compensation that you deserve.
Most states go by the multiplier method, which takes the amount of money awarded for special compensatory damages and multiplies it by a number from one to five. The more serious your injuries, the more likely your personal injury lawyer will ask for a high multiplier to take care of your pain and suffering.
Punitive damages penalize the defendant in a civil case for committing an act of negligence that led to you suffering from one or more injuries. For example, you might win punitive damages if your attorney can prove the defendant acted in a way that caused you harm.
Punitive damages can represent the largest percentage of the money awarded for the compensation awarded in a personal injury case. Knowing what to do after I win a settlement often depends on how much money a judge or jury awards you in punitive damages.
How Should I Handle My Finances After a Settlement?
Knowing the answer to the question, “What do I do after I win a settlement” hinges on what type of settlement you and your personal injury attorney decide is the best way for you to receive compensation for your injuries. You have the option to receive a lump settlement, which prevents you from falling victim to an extended period of inflation. The other option is called a structured settlement, which represents a series of payments over a specified period. Agreeing to a structured settlement allows you to create a budget that revolves around the terms of the settlement agreement.
Whatever you and your personal injury lawyer decide, you need to devise a plan on how you will manage your newfound financial gain.
Depending on where you live in the United States, a legal settlement might keep your financial gain away from the internal Revenue Service (IRS). However, most legal settlements result in the payment of taxes, regardless of whether you win a lump sum or a structured settlement.
After you calculate the value of the taxes you must pay, you should put that money aside before deciding what to do with the rest of your settlement money.
Slow and Steady is the Game
After accounting for your tax obligation, you should step back for several days to consider your financial options. When you make financial decisions without being under the influence of adrenaline, you will make financial decisions that are the best for your future.
Create a plan for both the short-term and long-term when mapping out a strategy for how to spend your settlement money. Short-term financial transactions take care of outstanding and delinquent bills. Long-term financial transactions set you up for success for the rest of your life.
Take Care of Your Debts
When you focus on short-term financial obligations first, you address the debts that keep you from enjoying healthy personal finances. Participating in the legal settlement process can take weeks, if not months to resolve. This means any debts you accumulated before you got hurt have grown considerably.
Take care of high-interest-bearing credit card debt first, before you address other debt obligations such as credit card and student loans.
Paying off debt addresses just one factor of the financial equation. You also want to put your settlement money to good use by investing in assets that produce consistent income. Mostly secure financial assets such as stocks and bonds can generate income that helps you take care of some of your debt obligations. Investing in a Certificate of Deposit (CD) and/or a money market fund represents a low-risk way for you to earn money without doing anything more than signing a financial document.
Go Back to School
Perhaps no investment has more of a positive impact on your financial future than investing in education. Whether you earn an undergraduate degree or complete an important professional certification course, putting some of your settlement money towards educations increases your value in the job market.
Before you invest in your education, take the time required to perform adequate research. Study the outlook for the career you want to pursue. As we head towards 2022, the technology industry remains one of the most lucrative careers for aspiring professionals.
Plan for the Future
Knowing the answer to the question, “What do I do after I win a settlement” involves planning for your financial future. This means you should consider buying life insurance to protect loved ones against financial losses. Creating a will also helps you enjoy peace of mind knowing your loved ones are protected if something happens to you. With the professional advice of a financial planner, you might open a trust that protects you and your family from lawsuits, as well as designate the beneficiaries of your financial assets.
Contact a Personal Injury Attorney From Morgan & Morgan
Since 1988, the personal injury lawyers at Morgan & Morgan have recovered more than $7 billion for our clients. The money won for personal injury cases includes a substantial sum for settling claims and lawsuits. When you search for a personal injury attorney, you want more than a litigator. You also want a lawyer who knows how to negotiate favorable settlements for clients.
After one of our highly-rated personal injury attorneys negotiates a favorable settlement, the lawyer will sit down with the client to discuss options on how to best the large financial windfall. After you take care of our contingency fee, you have several options on how to manage your settlement money.
Make every dollar count by scheduling a free case evaluation with one of the state-licensed personal injury lawyers at Morgan & Morgan.