What Questions Should You Be Asking Your Client During Settlement?

When an attorney works with a personal injury or wrongful death claimant, the ultimate goal is generally to maximize the recovery for the claimant. While a large recovery is certainly beneficial to the claimant, it may not always be the best idea for the claimant to accept the settlement proceeds in the form of a lump sum.

To help your clients get their financial footing, make sure you are asking the right questions during the settlement process. Here are three different situations that illustrate the types of questions that need to be answered before each claimant takes the settlement in cash:

Situation #1: Megan is a 40-year-old widow who lost her husband as the result of a wrongful death case. She works full time and has a solid income, has one daughter, and does not have any medical expenses that need to be covered.

Before Megan settles, ask:

• Does she want any funds to supplement her current income?
• Does she want funds set aside for her daughter’s college education?
• Does she want funds available when she reaches retirement age?

Since Megan is currently in a stable financial situation, she may want to take a small portion of the settlement up front in cash, and place the remainder in a structured settlement to meet her and her daughter’s future needs. Structured settlements are very flexible in design, so Megan can opt to receive payments monthly, bi-annually, annually, or in the form of a few future lump sums. She just needs to make the decision to structure prior to finalizing her settlement.

Situation #2: Jim is 66 years old and has just received a personal injury settlement. His children are grown and his income needs are supplemented by Social Security.

Before Jim settles, ask:

• Does he receive any needs-based government benefits?
• Does he want another source of income to supplement his daily needs?
• Is there any chance that he may outlive his current sources of income?

If Jim does receive needs-based benefits such as Medicaid or SSI, accepting his settlement in the form of a lump sum would most likely disrupt his eligibility. He may want to consider a pooled special needs trust as an alternative option. If Jim is not on needs-based benefits, he may want to take a portion of the cash up front, and place the rest in a structured settlement to provide him with the peace of mind that he will not outlive his income.

Situation #3: Lisa is 22 years old. She wants to take her personal injury settlement in the form of a lump sum and invest it, but she’s never had any experience investing. She has expressed some interest in a structured settlement, but is worried that interest rates are too low to compete with the open market.

Before Lisa settles, ask:

• What are her ultimate goals for the money? A home purchase? Retirement? Something to supplement her income?
• What types of investments is she looking at—and what are the overhead costs and annual fees associated with each?

What Lisa may not know is that even with rates of 4-6%, structured settlements can provide returns that rival traditional investments because structures do not have overhead costs or annual fees. Also, the rate of return for a structured settlement is guaranteed¹—try finding that in the open market!

Contact the structured settlement experts

The Traci Kaas team works with clients of all ages and backgrounds to create structured settlement plans that provide lifelong financial stability. Contact us today at 800-354-2258 or info@tracikaas.com to learn more.

1 Guarantees are subject to the claims-paying abilities of the issuing insurance company.