Getting a favorable judgement in a major accident or personal injury case can leave you with a significant amount of money. Determining who should get the money and the rest of your estate after you are gone is an important consideration, and you should be sure to contact an estate planning attorney to help you protect your assets and ensure a successful distribution of your estate. Here are a few options for estate planning after you've received a large settlement.
529 College Plans For Grandchildren
Making sure your grandchildren have the funds to attend college may be one of your biggest priorities. While there are several options for leaving money to your grandchildren, a 529 college plan offers a few key benefits that trust funds and custodial accounts might not. Some reasons to choose a 529 account include:
- No tax penalties if used for college education expenses
- Can be front-loaded with up to $70,000 without having to pay a gift tax penalty
- Won't impact your grandchild's ability to apply for financial aid
Be sure to talk to your estate planning attorney or financial adviser to make sure you understand all of the tax implications for setting up these types of accounts.
Trusts For Adult Children
If your adult children will be entitled to a considerable amount of money after you are gone, you may want to consider setting up trusts that encourage them to spend responsibly. Arranging for trust funds that pay out every year or at specific intervals ensures that your children won't be able to run through their inheritance right away. This means you can rest a bit easier knowing they are financially set for the terms of the trust account. You can also set up a similar type of trust for minor children to ensure that their guardians do not spend all the money. Talk to your attorney about minor trusts and regular trust accounts for adults to protect your beneficiaries and keep them financially stable.
If you come into a large cash settlement from an accident or personal injury case, you may consider leaving some of your money to a favorite charity or cause. You can set this up as a lump-sum gift in your will or you can set up a charitable trust. You may want to create an endowment at your alma mater or make a significant contribution to a children's hospital. Talk with your financial advisers and contact the charity you wish to give to. This will ensure that your funds are set up properly and that the money goes where it is needed. Don't forget to discuss the decision with your children and any other beneficiaries, as this will help to prevent any surprises when the time comes to read your will.
Work with your attorneys to create the strategy that works best for you. Remember that managing your money responsibly now can ensure that it benefits your entire family for years to come.