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Today Planning is More Critical than Ever

March 24, 2020

Now, more than ever, proper settlement planning is critical for disabled clients.  Protecting their recovery should be top of mind and a high priority given the turbulence in our global markets.  There are always going to be ups and downs in the financial markets.  The real estate market has crashed.  The tech market has crashed.  The oil markets have crashed.  There will be ups and downs in everyone’s personal financial situation.  You need a new car, roof or the AC goes out.  Now we have a virus that is creating an economic and social shutdown of our way of life for the foreseeable future.

Our current financial crisis illustrates how critical it is for you to bring in a settlement planner to speak with your clients.  Your clients do not have to plan for their settlement, but they do deserve to speak with someone that has the education, experience, and knowledge to show them the options.  Education about ways to protect the recovery from rapid dissipation and insulation from the market are exceedingly important.

If you have a client that settles their case, they need to know the ramifications of their financial decisions.  The two questions that always need to be addressed immediately before accepting any settlement are:

  1. Can I take any portion of my settlement in cash or will that impact my public benefits?
  2. Can I utilize a structured settlement for a portion of my settlement?

Those two questions have to be asked and answered on every case before anything is finalized.  The answers to those questions will dictate the form of the settlement and set the stage for proper planning.  Not asking those questions, could cause irreparable harm to the client.

As part of the planning process, it is important to meet with a qualified settlement planner to help your client create a visual picture of their future.  They need to do some basic budgeting.  Questions need to be asked like: How much do I NEED now and ongoing?  What do I WANT now and ongoing? What public benefits are necessary for my future?

If a settlement planner can get a picture of the client’s needs and wants, solutions can be created to provide for as much of those as possible.  By making sure critical questions get asked and simple budgeting is done, creating a rock-solid settlement plan becomes much easier.  There are many benefits to crating a settlement plan which includes a structured settlement and public benefit preservation vehicles.

Structured Settlement Benefits

  • Peace of mind (Guarantee and Fixed): The periodic payment schedule is outlined in the settlement documents and does not change with the market fluctuations.
  • Creditor Protection: Future periodic payments are not subject to creditors.
  • Lifetime Income: Annuities are one of the only financial services products that will pay you for the rest of your life (regardless of how long you live).
  • Tax-Free Payments: All payments received from a traditional structured settlement are tax-free.
  • Dollar-Cost Averaging Tool: A structure can create monthly, quarterly or annual income payable to you over a period certain.  These funds can be used to invest in other asset classes over time to lower the risk of a single investment date.

Public Benefit Preservation Benefits

Income:  Public Benefit programs from Social Security can continue to provide income for your lifetime.

Medical Coverage:  Programs through Medicaid and Medicare can provide health insurance benefits at no or a lower cost vs private coverage.

Years upon years of settlement planning experience teaches us inevitably there are clients who need and would benefit from a structured settlement and/or trust to preserve benefits.  All too frequently clients decide to take a cash settlement only to regret their decisions and want to go back on their public benefits they lost.  At the same time, clients can structure too much of their settlement and need cash.  It is critical to make sure that clients have the right allocation of their settlement to upfront cash, structured settlement, and trust.  This blend, crafted at the time of settlement, is a critical foundation for their future.  Proper settlement planning will impact how easily a disabled client transitions from litigation to life.

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