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Famly: The Best of Times, The Worst of Times

As many of you know, my family consists of Husband, Wife, and Four Kids. We are, however, part of a much larger family that includes my wife’s parents, her eight siblings, their spouses and children, not to mention my parents and siblings and their children. With that as backdrop, I am here to tell you that I am one of the lucky few whose family functions are actually most often “the best of times”. But I do recognize my good fortune; not everyone is so lucky. Family problems can indeed be annoying, frustrating, painful, and difficult. But are they truly the “worst of times”?

Sometimes, yes. The family involved in one recent case certainly qualifies for such a consideration. Let me introduce you to “Lois Lane” (not real name). Lois is a single 28-year-old woman who suffered significant injuries in an auto accident several years ago. Over this past summer, several attempts to resolve Lois’s case through settlement negotiations culminated in an offer that provided $ 135,000 in cash at settlement to pay her attorney fees, expenses and cash reserves. The plan was supplemented by payments of $500 per month guaranteed for the next 20 years and ended with a guaranteed lump sum payment of $145,070 when she turned 50. This offer provided Lois with $400,070 in guaranteed tax-free payments at a cost of $275,000.

For a variety of reasons, the case did not settle at that level and proceeded to trial. At its conclusion, the jury awarded Lois $500,000 for her injuries, certainly “the best of times”, right? Lois’s attorney told me that the clearest voice he heard over the uproar in the courtroom after the verdict was announced was that of Lois’ mother who declared “we can finally pay off the mortgage!” Did I mention that Lois is 28 and an emancipated adult? Counsel described a scene that Dante himself might have scripted. It seems that Lois’s family thought that she just won the lottery and her award would make all of their dreams come true.

This is an all-too-familiar theme in claim settlements, jury awards, and any situation where a person finds themselves the recipient of “sudden money”. As you may recall from my June 2009 edition of this journal, writer Susan Bradley (author of the book of that same name, “Sudden Money”), finds that people who come into new cash either keep the money and lose family…or, lose the money and keep family…or, or lose both. Clearly, “the worst of times”.

There is nothing either we or Lois’ counsel could do to improve her family situation, but there was a lot we could do to help Lois preserve her award. As I said, Lois is a healthy and competent young adult woman living and working in New York State. Her attorney advised that, since Lois is currently gainfully employed, her financial needs would best be served by an immediate cash payment to pay down some consumer debt, followed by a series of large lump sum payments on her 35th and 45th birthdays, followed finally by a deferred but guaranteed lifetime monthly income for a retirement fund.

With his feedback in mind we went to work. We structured Lois’s $500,000 award to provide $176,650 in attorney fees and expenses, $173,350 in an immediate cash payment to Lois, a lump sum of $60,000 on her 35th birthday, a lump sum of $100,000 on her 45th birthday and $500 per month paid to Lois for life, 25 years certain with payments commencing in 20 years. Relief from credit pressures, reliable significant lump sums to meet unforeseeable needs and a lifetime tax-free income. Not a bad start in retirement planning. This plan guarantees that Lois (or her estate) will receive at a minimum, $659,808 in tax free payments and in excess of $700,000 if she lives a normal life expectancy.

A plan like this may actually help Lois with her family situation after all. She does have a substantial immediate cash payment that she could use to help some family members if she believes it’s the right thing to do. But if she prefers not to, she now has an ironclad good reason for declining their requests: she simply does not have the money. She can simply and truthfully tell them all that she does not have all the money now, as her award is being paid out to her over time, the actual amounts and timing being subject to a confidentiality provision (and none of their d___ned business). Freedom from aggressive and needy family members? More “best of times”.

While poor Lois’s mother will have to continue to pay her own mortgage and the rest of her family will have to surrender their dreams of a Lois-funded bailout, Lois’s financial future looks pretty good. Best of all, Lois is happy with her settlement and thus, happy with her attorney as well for devising this plan.

And why wouldn’t she be? To abuse Mr. Dickens’ classic literature one last time, this was clearly “…a far, far better thing she had done than she had ever done before.”* A far, far better financial future for Lois that she would have otherwise ever known.

Do you have a case where the claimant’s family is circling? Want to help build a settlement that truly protects the recovery for the person for whom it was meant?
Call Frank C. Kilcoyne, CSSC at 800-544-5533. I am here to help.

* My apologies, Mr. Dickens.