How Does A Worker's Compensation Settlement Affect Estate Planning?
A workers' compensation situation creates a lot of decisions for the worker and their family. Everyone has future plans and most of those future plans include taking care of the family after one family member has passed away. However, there are events that enter into a person's life that can change those plans and the person suddenly needs to consider a broad array of possibilities.
If you are on workers' comp and decide to take a comp settlement, then you would be surprised to know how many aspects of your financial life it changes. For example, taking a comp settlement could reduce your Social Security benefits if you do not submit the proper paperwork before your Social Security benefits begin. The problem is compounded if you take on a workers' comp case after your Social Security benefits begin.
Knowing that a comp settlement can affect your Social Security benefits opens your eyes to other possible issues. Can a settlement affect estate planning? Should you alter your estate planning because of your worker's comp case, or should you alter your workers' comp arrangement to fit your estate planning? It is a situation that, more often than not, causes people to accept a compensation settlement and move on with their lives.
Understanding Workers' Comp In New York StateThe workers' comp system in New York State is similar to most other states, and TheDisabilityGuys.com states that New York State law requires employers to provide workers' compensation benefits by purchasing insurance or by self-insuring. There are also some rules that enter into a person's mind when they start thinking about their estate planning. For example, if you win a workers' comp case that awards you an income for life, then it is nice to know that you can still provide for you family even though you cannot work. But what happens when you pass away.
In the New York State workers' comp system, there can be a death benefit to immediate family members of a worker who has passed away while getting benefits. The problem is that the worker has to pass away from a condition related to their work injury for there to be a death benefit. If the worker passes away from something else, then there is no benefit at all.
How Workers' Comp Factors Into The Estate Planning Process?It is not unusual for a good workers' comp attorney to recommend that their client seeks a settlement instead of taking payments for the rest of their life. For one thing, the insurance carrier would welcome the opportunity to settle, which is not usually a good thing for the worker. But with a good attorney, the worker can get a settlement that sufficiently compensates them for their injuries.
No one can predict the future. No one knows how or when they will die. You may have a great life insurance policy as part of your estate planning. However, your family also deserves whatever may be left over from your workers' compensation case. With a settlement, you can take the lump sum and use it as part of your estate. You can invest it, or you can live off of it as part of your income. As we mentioned earlier, you will need to work with your attorney to make sure that your settlement does not adversely affect your Social Security income too much to make sure you get all of the income you deserve.
Taking a settlement to protect against the possibility that your death may have nothing to do with your work injury sounds like a risk. But, it really is not that big of a risk at all. If you are younger, then taking the settlement frees you up to do something else with your life and still have your settlement as part of your estate.
The question can also be raised that what if you pass away from a condition not related to your work injury after only taking a few payments of your workers' comp case? Your family could be missing out on hundreds of thousands of dollars.
When you err on the side of protecting your family, then you can never go wrong. If you have a workers' comp case active and wonder if you should settle, you may want to think of your estate planning needs and realize just how much sense a settlement really makes.
Author Bio: Brian Mittman is a managing partner at Markhoff & Mittman, P.C. He is experienced in workers comp, social security and personal injury law.