Losing a spouse can be shattering, emotionally and financially. When a spouse dies, the surviving spouse and children are left with the overwhelming task of trying to establish a new normal. The hardship brought upon by this situation is further exacerbated when a widow is involved in a wrongful death settlement and is suddenly forced to make financial decisions that he/she may not be equipped to handle. A trusted advocate that offers careful, customized planning is a welcome partner in the process and can help ease the transition into this new stage of life.
Assessing Needs and Goals with a Trusted Advisor
As a partner in crafting a settlement plan in a proactive manner, the first step is determining the family’s immediate needs and long term goals. If the decedent was the primary breadwinner, then a greater percentage of the settlement proceeds might go towards subsidizing these lost wages that once provided for day-to-day living expenses and lifestyle needs, as opposed to how settlement proceeds from a non-working spouse might fit into a financial plan. Additionally, the needs of a family with young children will differ from the needs of a family with grown children or no children at all.
The death of a spouse can also create feelings of uncertainty and instability. Decisions once made as a couple now rest on the shoulders of the widow, so the surviving spouse may not know who to trust. Many claimants lean heavily on their attorneys for guidance, which is why the attorney’s referral of a trusted settlement consultant to help manage a settlement can be so beneficial to the claimant. Introducing the settlement consultant early in the process allows time to cultivate a relationship and build trust and in turn, formulate the most suitable solutions for a claimant’s financial future.
Planning in Practice: Two Examples
To illustrate, here are two examples of how a settlement consultant might approach recommendations for surviving family members based on their individual needs and goals:
Example #1: Stay-at-Home Spouse with Three Young Children
Ken is a stay-at-home dad with three children under the age of thirteen. His wife, Wendy, worked in the tech industry and was the primary income earner. Ken has gone back to work since his wife’s death but is concerned about maintaining the same standard of living and saving for their children’s college education.
Ken may want to consider…a structured settlement annuity.
A structured settlement annuity provides a risk free option for the settlement funds to grow tax-free. Structured settlements are flexible in design, so with the help of his settlement consultant, Ken can create a plan that works for his family, including:
- Tax-free structured settlement payments to supplement his monthly income and help pay for childcare costs; and
- Income tax-free lump sums to fund college plans for each child.
Example #2: Mid-Forties Working Spouse with No Children
Janet is a 45-year-old widow who works full-time. Her husband, Marcus, brought home 40% of their income, which went toward savings. Janet would like to pay off the balance of their home mortgage and the balance of a car loan, but isn’t sure what to do with the rest of the money.
Janet may want to consider…a market-based structured settlement.
Janet can take a portion of the settlement, income-tax free, and use it to pay off the balance of her home mortgage and car loan. With the remainder of the settlement funds she could utilize a market-based structured settlement, which is much like a traditional structured settlement with a market-based investment portfolio used as the financial vehicle, rather than an annuity. Janet’s structured settlement could provide her with:
- A tax-free, bi-annual payment to supplement her income; and
- A tax-free retirement fund, managed by her trusted financial advisor
Contact Kimberly Overby to Learn More
For more information about customized settlement solutions, contact me today at koverby@sagesettlements.com or (281) 460-6535.
