Don’t Forget Lawsuit Proceeds In Your Estate Plan
When you are creating your estate documents, you may give a lot of thought about the things you own, and your assets, when you are thinking about who to leave them to or how to leave them to the people you love. But one asset that gets overlooked are things you may not think of as assets: Proceeds from pending lawsuits.
How the Situation Happens
Often, people pass away while they are in the midst of litigation that could yield money for them. Perhaps it is a personal injury case, or an insurance claim, or a contract claim—any lawsuit where there is the chance that if successful, money will be received.
The problem is that the case is in its infancy—maybe it’s not even a filed lawsuit yet.
Unsettled-But Still an Asset
Even though the case may not even be a legal case or claim yet, it still could be considered an asset that can be left to beneficiaries. Of course, the legalities of whether your beneficiaries can continue the claim for you depend on what kind of lawsuit that it is (in some cases, the lawsuit will have to be dismissed when you pass, but in other kinds of lawsuits it can continue).
If your estate can continue your lawsuit, or receive the proceeds of a lawsuit’s settlement, these are assets that need to be accounted for in your estate plans.
These assets can be difficult, because you don’t know the value of the asset. For example, you may not know whether a jury in your personal injury lawsuit will award you (or your beneficiary) none, some or all of the money you are asking for. That’s OK-you can still leave the proceeds of the suit to whomever in your estate plan.
Designating a Representative
Your lawsuit may have to be carried out by your designated personal representative. You may have to designate someone to be your personal representative—or at least, someone who will take charge of informing any lawyers working on your case that you have passed away, and communicating with the lawyers to figure out if the lawsuit can proceed, and what needs to be done to push it forward.
Assets received from a verdict or a settlement become property of the estate when received. Because the proceeds from the lawsuit may not be received until months or even years after you pass, your personal representative or someone you designate, will have to distribute the proceeds as you designate. That means that you shouldn’t forget to designate how much of the money you receive goes to each beneficiary.
If you had a complete estate plan drawn up already, and after it was completed, you initiated the lawsuit, your estate plan may need to be amended to include the lawsuit’s proceeds.
Call the Torrance will attorneys at Samuel Ford Law today to discuss the probate process and the assets in your estate.