The check arrives in the mail—finally, your personal injury settlement has been paid. After months or even years of medical treatments, negotiations, and courtroom proceedings, you now face an important question: What's the best way to manage this money to secure your future?
For many St. Louis personal injury victims, a settlement for a motor vehicle accident or premises liability claim represents not just compensation for past suffering, but critical financial resources needed for ongoing care, lost earning capacity, and future stability. Without proper planning, these funds can quickly disappear, leaving you vulnerable precisely when you need protection most.
At Bollwerk & Associates, our St. Louis personal injury attorneys believe understanding how to manage your settlement funds effectively is essential for long-term financial security. Let's explore smart strategies for protecting your hard-won recovery.
Common Financial Pitfalls After Receiving a Settlement
Many personal injury victims face similar challenges when managing their settlement funds. Being aware of these potential pitfalls can help you avoid costly mistakes.
- Immediate spending temptations. After enduring financial strain during recovery and litigation, it's natural to want to make delayed purchases. However, using settlement funds for luxury items can rapidly deplete resources to cover future medical needs and living expenses.
- Family pressure. Relatives or friends who learn about your settlement may request loans or "investments" in their business ventures. These situations rarely end well.
- Investment scams. Predatory financial advisors and scammers specifically seek out personal injury victims who have recently received large sums of money.
- Tax misunderstandings. While most personal injury settlements are not taxable, certain portions—such as punitive damages or interest—may trigger tax obligations.
- Benefit eligibility changes. A lump-sum settlement might disqualify you from needs-based government programs like Medicaid or Supplemental Security Income (SSI).
Structuring Your Settlement for Long-Term Security
When it comes to managing your settlement funds, several strategic options can help protect your financial future. For example, many of our clients at Bollwerk & Associates, opt for structured settlements. This means that rather than receiving a lump sum, you can arrange for regular payments according to a schedule that matches your anticipated needs. This approach offers tax advantages and helps prevent premature depletion of funds.
If you qualify for means-tested government benefits, placing settlement funds in a properly established special needs trust can maintain your eligibility while allowing the trust to pay for supplemental needs not covered by those programs.
Take Control of Your Financial Future Today
If you've recently received a personal injury settlement in the St. Louis area, don't navigate these complex financial decisions alone. The experienced team at Bollwerk & Associates understands the unique challenges you face and can connect you with trusted financial professionals who specialize in helping injury victims protect their settlements.
