Estate planning involves the decisions of how your estate will be divided amongst your loved ones and charitable organizations after you die. You will need to state exactly who you want to leave your property and assets to, as well as how and when you want them to receive it. Estate planning is a very important part of life to ensure your family and loved ones are taken care of after you die, especially when personal injury settlements are involved. If you have suffered from a injury and won a personal injury settlement, it could largely affect your assets, as well as how you may decide to plan your estate. These are all things that you will want to discuss with an estate planning attorney Ridgefield, CT trusts.
In order to protect your estate and keep everyone’s best interests in mind, the following items are matters to consider:
Medical Expenses
Medical expenses that could come from any injuries suffered from your accident could cost a large amount over time. In addition to medication, if your injury does not allow you to go back to work and earn an income, you may have to depend entirely on the personal injury settlement to fund your life. If your expenses are not recognized as such, they could be adding value to the estate which could therein cause you to pay more taxes on money that is not income. It is important to discuss the cost of your medical expenses versus your personal injury settlement with an estate planning attorney to ensure you are not spending more money on taxes than necessary.
Documentation
Many changes in life occur after suffering from an injury. If you are injured to the point of having a disability, it could affect your status and then all of your documents would need to be adjusted accordingly. These documents include any estate planning documents, wills, power of attorney, or any legal document. If you and your spouse were to have been killed in an accident, there would need to be proper documentation completed to create a trust for any of your children that would be under the age of 18 at the time of your deaths.
Investments
Personal injury settlements can often end up as highly profitable for the victim. It may be a wise decision to hire someone to effectively invest any profits from the settlement. The plan of investing should be done quickly after receiving the settlement funds to ensure there is enough money to pay for any necessary medical fees associated with the accident.
Taxes
It is important to work with an estate planning attorney to discuss any state or federal tax laws that you could be responsible for with your personal injury settlement. Tax laws are always changing so working with a professional is critical to ensure you are paying the correct amount of taxes. Currently, there is a exemption for taxation on funds under $5.45 million for individuals. If your personal injury settlement were to be higher than that, you would need to adjust your estate plan to factor in that value.
Thank you to our friends and contributors at Sweeney Legal for their knowledge about estate planning.