Introduction

Receiving a personal injury settlement can bring financial relief after an accident, but it also raises important questions about how the settlement impacts your will and estate planning. In South Carolina, understanding how a settlement affects your estate can ensure that your assets are distributed according to your wishes and protected from unnecessary taxes or legal disputes. Here's what you need to know if you've secured a settlement and want to plan for the future in Charleston, Georgetown, Myrtle Beach, or Pawleys Island.

What Is a Personal Injury Settlement?

A personal injury settlement is compensation awarded to an individual for damages such as:

• Medical expenses.
• Lost wages.
• Pain and suffering.
• Emotional distress.

Settlements are typically awarded as a lump sum or structured payments, depending on the agreement.

Does a Settlement Become Part of Your Estate?

Whether a personal injury settlement is included in your estate depends on the timing and type of compensation:

1. Before Death: If the settlement is received before death and remains in your possession, it becomes part of your estate and is distributed according to your will.
2. After Death: If the settlement is awarded after your death, it may be distributed according to South Carolina's intestacy laws or as directed in your estate plan.

Tax Implications of a Settlement

Personal injury settlements are generally tax-free in South Carolina if they compensate for physical injuries or illnesses. However, portions of the settlement for lost wages or punitive damages may be taxable. Consult a tax professional or estate attorney to understand how taxes may apply.

How a Settlement Affects Your Estate Planning

A personal injury settlement can impact your will and estate in several ways:

1. Asset Distribution

   • If you don't update your will, the settlement funds may not be distributed according to your wishes. Ensure your estate plan reflects this new asset.

2. Trusts for Protection

   • Consider setting up a trust to protect your settlement from creditors and simplify the distribution process.
   • Trusts can also help ensure minors or dependents receive their inheritance in a controlled manner.

3. Probate Considerations

   • Without proper planning, the settlement may go through probate, delaying distribution to heirs. A comprehensive estate plan can help avoid this.

4. Special Needs Planning

   • If you or a beneficiary receives government benefits, such as Medicaid or Social Security, a settlement could affect eligibility. A special needs trust can protect these benefits while managing settlement funds.

5. Creditors and Liens

   • Creditors may have claims on the settlement, particularly if you have outstanding medical bills or other debts. Proper planning can help shield your estate.

Why Work with an Attorney?

Combining personal injury settlements with estate planning requires expertise in both areas of law. An attorney can:

• Help you structure your settlement to minimize taxes.
• Protect your assets from creditors and ensure compliance with South Carolina estate laws.
• Guide you in updating your will or creating trusts.

Our personal injury attorneys in Charleston, Georgetown, Myrtle Beach, and Pawleys Island work closely with estate planning professionals to provide comprehensive guidance for your settlement and future planning.

Conclusion

A South Carolina personal injury settlement can significantly impact your estate and financial future. To ensure your settlement is managed wisely and aligned with your wishes, contact our experienced attorneys in Charleston, Georgetown, Myrtle Beach, or Pawleys Island. We're here to help you protect your settlement and secure your legacy.