Lawsuit settlements often mean money will come to you in an unexpected manner. Of course, the other way too is a possibility. Either way you will know the settlement amount beforehand, but actually receiving the money that the court decides might result in you making sudden decisions, which in the long run might be bad for you. There are various factors to consider on spending the money wisely and it is possible that you might not have that much money after paying attorneys fee, which especially considering the fact that some of them work on a “no win no fee” basis, which can be quite high if you win.
Paying due bills
It is highly probable that you will have medical bills to pay for if you have won a lawsuit settlement for whatever reason. In the case of personal injuries, you may need to take some extended period of time off from work, which means you will have to pay for the living expenses without any means of income. In such situations too, these money settlements will be of great help to you.
You attorney will have to be paid following a lawsuit settlement. Some of the attorneys work in a “no win no fee” basis, which means, you will only have to pay the lawyer’s fee if there is a successful money settlement. Make sure that when you hire the attorney, you agree upon the method of payment and also clearly state the same in the retainer agreement. Some attorneys receive payments as a percentage of the settlement amount and it may be calculated based on the gross settlement amount or on the net amount.
You will have to pay taxes on the money you receive as settlement amount, as any amount received as lawsuit settlements will be
considered as if it were income. Internal Revenue Service (IRS) Tax Code section 61 makes it very clear that any income you receive is taxable, unless it is excluded by the IRS. There is an exemption, however, though as any income received from lawsuit settlements for personal injury or illness are excluded from taxes (Section 104(a) (2)).
Investing the money received from lawsuit settlements is another way of managing the money you receive. Managing money received from lawsuit settlements is by no means a difficult job, but if you meddle with it without any careful planning, you might end up regretting your decision.