How To Manage Your Settlement Money After Your Florida Personal Injury Case Ends
You have successfully proven that another party’s negligence caused your injury and damages, and you have just been awarded a personal injury settlement. This is a massive victory after all the stress and uncertainty. However, after the excitement passes, you might start to wonder how you should manage your settlement money. Remember, what you do with your settlement money is just as important as getting it. Below is a simple guide on how to handle your settlement money after your Florida personal injury case ends.
Disclaimer: This article is for informational purposes only. It is not intended to provide legal advice. If you are looking for legal advice, please reach out to a Florida personal injury attorney.
Understand What Your Settlement Covers
Before you spend a single dollar, you need to understand what your settlement entails. A Florida personal injury settlement covers several damages, including;
- Medical expenses (past and future)
- Pain and suffering
- Property damage
- Lost wages and lost earning capacity
- Loss of enjoyment of life
Ensure you ask your attorney to break down your settlement for you. Usually, your lawyer will begin by settling any medical liens. These are claims by doctors, hospitals, or insurers for treatment related to your accident. Attorney fees and case-related expenses will also be taken care of before you can receive the remaining amount.
Pay Off Bills and Debts
If you have unpaid bills and/or debts, settle those before spending any of the remaining money. This may include credit card payments, rent or mortgage payments, or other debts and bills. Paying your bills and debts early can help you reduce ongoing interest payments. It can help keep your finances on track.
Understand the Tax Rules
After receiving a personal injury settlement, it is crucial to determine how taxes may apply to your settlement. Generally, personal injury settlements are not taxable under Florida or federal law. However, you should keep an eye on some exceptions which may be taxable on the federal level, including the following;
- Lost profits, lost wages, or punitive damages that are not directly related to your physical injury
- Interest earned while waiting for payment
- Emotional distress damages that aren’t linked to your physical injury
To be sure whether or not you owe any taxes, have a tax professional review your settlement.
Plan for the Future
Managing your settlement money involves planning for your financial future. For instance, consider investing, securing insurance, and estate planning. For instance, creating a trust or will can ensure your settlement money is handled according to your wishes in case something happens to you.
Common Mistakes To Avoid After Receiving a Settlement
Unfortunately, all too often, we see clients unable to pay for long-term expenses because they did not manage their settlement money well or made spending mistakes. Some of the most common mistakes to avoid after receiving a personal injury settlement include;
- Rushing into big purchases
- Lending large amounts to friends or family
- Making poor investments
Contact Us for Legal Help
Our West Palm Beach personal injury attorneys at The Pendas Law Firm can help you protect your settlement money. Contact us today to schedule a consultation.
The Pendas Law Firm also represents clients in the Ocala, Orlando, Miami, Jacksonville, Tampa, Daytona Beach, Fort Myers, Bradenton, Fort Lauderdale, Naples, and Melbourne areas.