If you’ve been the victim of a personal injury accident, it can be incredibly helpful to receive a settlement. However, the money that you are awarded from a personal injury settlement could impact the total value of your assets. An attorney, like an estate planning lawyer Phoenix AZ can turn to, will be important in understanding the impact a personal injury settlement could have on your own personal estate.
Developing an estate plan involves the division of assets to beneficiaries. You can determine your beneficiaries and sort out how your assets will be divided amongst heirs. You could divide your assets however you choose, whether it be to charity, close friends, or family members. When you pass away, your assets and prior income can be affected negatively by state and federal taxes. Planning your estate appropriately may reduce or even eliminate them.
Documentation from Your Personal Injury
Financial loss is one of the unfortunate results of many personal injury accidents. If you suffered serious or even disabling injuries, you could end up collecting a settlement of up to hundreds of thousands of dollars. If you are awarded a large settlement, your assets and personal income could be impacted in a major way. You’ll likely need to update certain documents in order to reflect your current financial standings and to account for accident-related expenses and compensation. In the event that you pass away or become incapacitated, it’s important to have updated estate planning documents and wills. Making sure that you do not over-report assets will also be important, as this would likely have an impact on the taxes you will have to pay. Federal estate taxes will impact what your beneficiaries receive if your assets are assessed at a higher value and are not accurately recognized.
Estate Planning and Taxes
You may be able to claim certain federal estate tax exemptions after receiving a personal injury settlement, but there is a limit to the total amount that may be exempt. You might need to change your estate plan in order to comply with federal regulations once your settlement reaches this limit. It is important to be aware of the laws in your own state because each state may govern this differently. Some states do not have fixed estate taxes, while others do not charge property taxes. Depending on your situation. you might have to pay both types of taxes.
Investing your money in a safe and effective fund, with the help of a professional, is a wise step to take after receiving a personal injury settlement. An experienced investment planning professional should be able to keep your settlement protected from unnecessary taxes and fees and ensure that you are able to pay your expenses.
When it comes to a personal injury award, it is important that you work with an estate planning attorney to help plan your estate. Planning ahead of time will be beneficial for you, as well as for your loved ones and family members. Call an attorney today.
Thanks to our friends and contributors from Kamper Estrada, LLC for their insight into estate planning and personal injury.