Settlement Scenarios You May Encounter

An unexpected death launches the survivors into an extended period of trauma and uncertainty. When it’s a wrongful death, your clients will need specialized guidance not only on the legal and financial options that are right for their situation, but also on the major elements of transition that invariably accompany loss. The goal? To create a stable financial future for the individual or family.

When the decedent is a parent, structured settlement planning depends largely upon the nuances of each family’s situation. That’s why it’s so important to engage the structured settlement consultant early, so the survivors are adequately protected. Let’s look at some scenarios:

Example #1: The breadwinner

If the decedent had been the family’s sole supporter, we recommend a structure that takes into account the following:

• Education plans for the children. We help the surviving parent and the children understand that Mom or Dad is going to continue to take care of you just as they did when they were alive.
• Life insurance for the remaining spouse. This may not have been on the family’s radar before, but it’s essential. If the surviving spouse is young, a $500,000 life insurance policy can be incredibly inexpensive, and settlement funds can be used to pay for a policy for the surviving parent.
• Guaranteed monthly income. If the settlement is large enough, we work to set up a plan to keep the surviving spouse in the home and maintain the lifestyle they’re accustomed to.
• Financial education. Many times, the family breadwinner was also the one to manage the finances. If that was the case, often we need to work with the surviving spouse on financial literacy.

Example #2: The stay-at-home parent

Often, the most challenging situation occurs when the decedent has been the anchor of the household. The structure must:

• Replace lost income for the primary wage-earner. In many cases, the surviving parent will need to be home more. This could significantly alter the amount of money they can bring into the home, and the settlement will need to offset that to preserve the family’s lifestyle and financial stability.
• Additional childcare costs. Even with a reduction of work demands and hours, the need to pay for daycare, aftercare, and other childcare costs is likely to increase dramatically in a one-parent household. This is certainly true when there’s no extended family nearby to provide support.
• Adjust life insurance. As the breadwinner, it’s likely that the surviving parent already had life insurance. Re-evaluate to be certain, and assess the policy to be sure it’s adequate given the family’s new situation.

Example#3: Equal earner with adult children

When the decedent is a more mature adult with a working spouse and an empty nest, considerations change a bit. We make sure to check all the boxes on a comprehensive financial checklist that covers the following:

• Make sure the bills get paid. One of the tenets of Financial Transitions Planning is to make sure the client makes all urgent decisions and has a short-term plan in place so regular bills are paid. Beyond that, though, we push the pause button on any non-essential decisions, giving the client time to regain their perspective and their ability to make sound choices.
• Evaluate the estate plan, insurance, and asset protection.
• Discuss gifting. Surviving adult children may have expectations of what they will receive when one of their parents dies, or the remaining parent may feel they want to gift their children or stepchildren with a portion of their settlement. It’s important for surviving spouses to remember that it’s just like the oxygen mask on the airplane: They need to take care of themselves first, and then help the people around them.

You would be right in thinking that in cases like this, it’s essential to bring on the structured settlement consultant in the earliest stages, allowing time for the consultant and the family to build trust and to create the foundation for a robust settlement plan.

But it’s never just about the money. Major life transitions require specialized expertise in helping clients through the cognitive and emotional setbacks, and attorneys should not be asked to take on this role. This is why Traci Kaas has acquired the advanced designation of Certified Financial Transitionist®, which allows her to expertly guide clients through the technical side of settlement planning as well as the very human side of loss and transition. In every case, clients are faced with both personal and financial reinvention, and they need the kind of counsel a CeFT® is trained to offer.

When an individual’s death leads to a major financial windfall, the survivors are almost always conflicted about receiving the money and need careful, long-term guidance so they emerge from the tragedy in a strong and stable position. “A lot of people think it doesn’t feel right to take the money,” Traci says. “They don’t want it. It represents an acceptance of the death. I help them see their settlement in terms of legacy planning.”

One of Traci’s clients, a single mother whose 16-year-old daughter was killed in an accident, has struggled for years to come to terms with the resulting $9 million settlement. The money was life-changing; where once she struggled to provide a private-school education for her gifted daughter, she now has a gorgeous home, an income that’s guaranteed for life, and the dream car they always talked about. But how can she accept and enjoy those things, when they came at the cost of her precious daughter’s life? Clearly, there’s a great deal more to genuinely helpful settlement planning than figuring out how to structure the funds

Clients in Transition? Contact Kaas Settlement Consulting Today

For more information regarding guidance for surviving spouses and families, contact Traci Kaas at Kaas Settlement Consulting today at (800) 354-2258 or by emailing info@tracikaas.com.