Don’t let a courtroom victory become a real-world loss

On Behalf of | Sep 17, 2021 | Estate Planning |

It’s naturally devastating when a child suffers serious injuries in a birth-related accident, in a wreck or via some other means. As your child’s parent and protector, you have every right to file a lawsuit on their behalf.

Once you win, what do you do with the money? How do you protect your child’s interests? That courtroom victory and sudden financial windfall is only a blessing if you handle it carefully.

Take steps to protect your child’s future

Most people don’t know how to manage large amounts of money — especially when it comes in rather suddenly. Here are some of the key dangers:

  • You probably don’t know how to properly invest the money so that it will grow over time. Parking it in a bank account won’t maximize your ability to use that money for your child’s future.
  • Everybody, friends and family alike, can become unfortunate drains on the money. If you leave yourself unfettered access to the funds, it may be hard to resist pressure for a small “loan” to your sister when her only vehicle breaks down and so on.
  • You could fall prey to predatory practices, such as schemers who know how to hook anxious parents into shady investment schemes.
  • The money could prevent your child, once they’re an adult, from being able to access important needs-based benefits, like Supplemental Security Income (SSI) and Medicaid.

What are your options? Well, as soon as you suspect that you’re about to receive a settlement or a favorable verdict in your child’s lawsuit, it’s wise to start thinking about an asset protection trust or a special needs trust. There isn’t any “one-size-fits-all” solution, so experienced guidance is essential.