Handling a Cash Settlement
Written by Lee Wyatt (last updated August 23, 2013)
Many people sit and dream about the opportunity to win a huge amount of money at the casino, or in the lottery, or even be awarded a lot of money in a court case. However, what most people don't stop to consider is that handling a cash settlement often comes with as many negatives as there are positives, and often even more. With the proper care, forethought, and planning handling a cash settlement can be the blessing that most of us hope that they are.
- Obtain advice. The very first thing that anyone who is thinking of handling a cash settlement must do is obtain professional help. This is not to say that you will need to go out and get a therapist, but rather you should hire a money manager. With the help of a money manager you can ensure that your money doesn't get wasted, and that it will in fact grow in size. Before hiring a money manager though, make sure that they have a positive reputation.
- Don't be in a hurry. One of the common problems that many people run into is that they get into a hurry about buying things, or even simply getting into a hurry period. The key to handling a cash settlement is to slow down and take your time. Consider all of your options, listen carefully to the advice that you get from people you trust, and then carefully make your decision.
- How will this affect your taxes? Another of the huge things that many people fail to consider when handling a cash settlement is the question of taxes. Most often a large cash settlement will mean that the winner is put into a higher tax bracket. Often that higher tax bracket will mean that you pay a larger amount of taxes. In addition to the amount of money in the settlement being taxed, most things that you purchase with it can also be taxed (such as houses, cars, and other "investment" type items).
- Can you sell it? Many people think that a great way to go about handling a cash settlement is to sell it off for one lump sum. However, this may not always be the case. The reason for that is that there can sometimes be legal limitations to whether or not you can sell a cash settlement. Before you sell the settlement, make sure that first you legally can, and second that you can financially afford what the results will entail.