When that fat settlement check arrives in the mail, your clients can’t wait to get their hands on it. Your clients have dreams of a Porsche 911, mini-mansions for their kids and mother and might even toss in a yacht for their down-on-his-luck uncle. You’re getting paid no matter, so everyone’s happy, right?
Not so fast, my friend. You cannot ignore your clients’ stupidity because if you do, their multi-million lawsuit recovery will be spent and wasted in less than a year. At the final meeting, your clients will be in denial and tell you that excessive spending “will never happen to me”. That’s when you tell them, “Oh, yes, it will.”
Be Different from Every Other Lawyer
Share everything you know about the most common financial mistakes made by injury victims, what they can do to avoid these mistakes and offer counseling from a trusted financial planner and trust attorney. Talk to your clients about the benefits of a structured settlement preservation trust.
Give your clients a free copy of Dave Ramsey’s book, “The Total Money Makeover”. Ask your clients to read and sign your “Secrets to Financial Freedom for Injury Victims” and continually reinforce the concepts of money management throughout the lawsuit.
Will this work? It’s a helluva a lot better than giving a check to the clients, wishing them well at your final meeting and knowing that (with near certainty) in less than a year their money will be gone. This, my friend, is irresponsible.
The Secrets to Financial Freedom for Injury Victims
We are grateful for the opportunity to represent you.
Unfortunately, we’ve witnessed many mistakes made by our clients and we’ve seen multi-million dollar recoveries squandered in less than a year. We know that you don’t think this will happen to you, but unfortunately, that’s what all of our clients say, and they are almost never right.
We want you to avoid these mistakes.
This is our best advice for avoiding financial ruin. If you follow these principles, your $ will likely grow and could very well double or triple. We want you to become an expert in money management.
#1: Declare War on Debt: List your debts—from smallest to largest–pay them off and destroy your credit cards.
You must draw a line in the sand and say, ‘I will never borrow again’.
Dave Ramsey, “The Total Money Makeover”
#2: No Credit Cards: Cut up your cards and cancel your credit accounts.
Broke people use credit cards. Rich people don’t.
Dave Ramsey, “The Total Money Makeover”
Avoid debt like your life depends on it. The goal is to get out of debt fast.
#3: Become an Expert in Money: Knowledge is power. Read all of Dave Ramsey’s books and attend his Financial Peace University:
- “The Total Money Makeover”,
- “Dave Ramsey’s Complete Guide to Money”,
- “Financial Peace Revisited”
#4: No Loans to Family/Friends: Never loan money to family or friends. Guaranteed, you will not recover a dime and your relationship will be ruined.
#5: Pay Cash: Pay cash for everything (if necessary, use a debit card). Never borrow again!
We buy things we don’t need with money we don’t have in order to impress people we don’t like.
Dave Ramsey, “The Total Money Makeover”
It’s hard to make a big purchase when you’re paying cash and you get better deals. When you spend cash, you spend less.
#6: Say “No” to Expensive Homes or Cars: Do not buy expensive homes or cars. New cars lose 80% of their value in just 2-3 years. Let someone else be the sucker.
Being willing to delay pleasure for a greater result is a sign of maturity.
Dave Ramsey, “The Total Money Makeover”
Delay big purchases—you’ll be glad you did the next morning.
#7: Tell Your Money What to Do: Create a new budget every month and tell your money what to do.
A budget is just telling your money where to go, instead of wondering where it went.
Dave Ramsey, “Dave Ramsey’s Complete Guide to Money”
Your income minus your expenses is your disposable income. You can always spend more than you make–live below your means.
#8: Get Your Credit Reports: Check your credit score once a year.
- Experian: 888-397-3742 (www.experian.com)
- Equifax: 800-685-1111 (www.equifax.com)
- Transunion: 877-322-8228 (www.transunion.com)
Remember to build your wealth, not your credit score.
#9: No One Gets Rich Quick: Invest in companies that treat their employees like gold. Forbes has an annual “The Best Companies to Work For”—do not invest in a company that isn’t on this list.
Energy, thrift, and diligence are how wealth is built, not dumb luck.
Dave Ramsey, “The Total Money Makeover”
My favorite long-term investments: Facebook, Apple, Novo Nordisk, Stryker, Costco, Amgen, Regeneron, Google and Amazon.
#10: Hire a Financial Planner: Hire a trusted financial planner who will guide you through the process of money management, debt elimination and budgeting. You need someone who will hold you accountable and kick your ass when you want to buy the 75-inch TV with no cash down.
Wealth building is a marathon, not a sprint.
Dave Ramsey, “Dave Ramsey’s Complete Guide to Money”
I am a fan of Timothy Denehy, CFP (tdenehy@forgeconsulting.com), a certified financial planner. Tim is knowledgeable, trustworthy and compassionate, and has spent over 25 years working with injury victims and their families to develop comprehensive plans to manage and protect a lawsuit recovery. Tim will hold the hands of your clients over the long-haul and let you know if they’re screwing up. I won’t do a settlement without Tim.
Financial Options for Your Lawsuit Recovery
When you recover money from a settlement or judgment, you will have three options:
- Cash Settlement,
- Structured Settlement Preservation Trust, or
- Structured Settlement Annuity
This explains the benefits and risks of each option.
Option #1: Lump Sum Cash Payment
Your funds are delivered via an electronic deposit into your bank account or the hand-delivery of a check. You are free to do with the money as you choose.
Almost always a cash settlement is a recipe for financial disaster. Do not take a cash settlement unless you are willing to lose it all.
Option #2: Structured Settlement Preservation Trust
A Structured Settlement Preservation Trust is designed to prevent you from spending your money. You can access the money in the trust to pay for basic necessities, such as college tuition, health insurance premiums or a down payment on a new home or car. However, you can’t touch the money to make spur of the moment purchases.
The Structured Settlement Preservation Trust provides you with periodic (weekly, monthly) income to pay your living expenses, i.e., gas, food, mortgage—this is the “job you can’t be fired from” (to quote Tim Denehy, CFP).
The Structured Settlement Preservation Trust protects you from spending sprees and living beyond your means, and with some time and patience, you will be amazed at the growth of your money. In just 5-10 years, the money in your trust may double.
We love the Structured Settlement Preservation Trust as a tool for providing regular income, preserving and growing your money and permitting access to the funds for the necessities of life.
Option #3: Structured Settlement Annuity
A structured settlement annuity provides a fixed benefit (i.e., $5k per month for life) in return for a large lump sum payment, i.e., $1 million. The rate of return on an annuity can be extremely low, i.e., 1-3%, and you will not get a better rate of return when interest rates increase. You are stuck with a very low rate of return for the life of the annuity–this is why structured settlement annuities (usually) suck!
A structured settlement annuity can make sense when the injury victim has a substandard life expectancy, known as a “rated age”. If, for example, the injury victim is a 5-year old who due to his injuries has a life expectancy of a 70-year old, the annuity will have a far higher rate of return than a normal, healthy infant would get. In this example, the annuity makes a lot of sense due to the substandard life expectancy (“rated age”) of the disabled infant.
Unless you get the benefit of a substandard life expectancy (“rated age”), we do not recommend structured settlement annuities.
The Decision Belongs to You
The decision concerning the management and investment of your lawsuit recovery belongs solely to you. This will be the most important decision you ever make and if you make mistakes, you probably won’t have a chance to correct them. We are here to answer your questions and guide you through this process.
If you have a financial consultant, make sure he/she has at least 5 years of experience managing the money of injury victims. The needs of injury victims are much different from the needs of the independently rich. Bottom line, you need a financial planner who is intimately familiar with the unique needs of injury victims and their families and will be there for you long after your lawsuit is over.
Read, Sign and Return this Agreement
Please acknowledge that you read this document by signing where indicated and returning an original to us.
We are grateful for the opportunity to serve you.
Dated:
_______________________________
Client
photo credit: free pictures of money Money via photopin (license)
