Three Steps to Weathering a Financial Perfect Storm with a Structured Settlement

The siren song of big market gains can result in financial ruin for injured people.

STEP ONE –
STEP BACK

Boat owners will tell you: It’s better to be on shore wishing you were out on the water than to be out on the water wishing you were back on firm ground.

For those who have lost income because of a death or disability, there is nothing worse than seeing settlement assets decline as a result of poor market performance. The siren song of high stock market returns can lure many a poor soul onto the rocks of potential financial ruin.

The first step in successful settlement planning is to take a step back and embrace BALANCE. Picture a sailboat:

• HULL: This is where life is LIVED onboard. It should be dry and comfortable. A comfortable settlement plan should consider adequate liquidity for monthly financial needs and larger planned and unplanned future expenses.
   
• SAIL: This sheet of nylon or canvas is designed to catch the wind and propel your vessel forward. The problem is that the wind, just like the financial markets, never blows consistently. On the one end, you can be stuck in the “doldrums” with no wind or gain OR on the other, caught up in a storm like the Andrea Gail.
   
• LIFE PRESERVER: A structured settlement is unique in that it provides guarantees. It can add consistent income to make life onboard more comfortable. It will keep the boat moving forward during periods when the wind doesn’t blow. And it will also keep you afloat when the storms come.

Guaranteed income is priority one when building a stormproof settlement.

STEP TWO – DESIGN YOUR BOAT

After stepping back and understanding the basic building blocks of a settlement plan, it’s time to design your boat. Too much sail risks capsizing and disaster. A hull too small will not provide a smooth ride and will leave people seasick. A life preserver should be the right size, neither too big nor too small.

A good design principle is to decide what absolutely needs to be guaranteed. Income is often first up and can be referred to as “financial oxygen.” It shouldn’t take your head going under the water to tell you this is critical to your voyage.

Structuring a portion of a settlement is a very smart way to provide this life-preserving resource. There are no income taxes due, no ongoing investment management costs or fees – just reliable ongoing checks (or electronic transfers) going into your “hull” to keep you warm and dry.

The hull should also contain enough money in cash for current needs and future liquidity and can be replenished in the future from either the sail (non-guaranteed investments) or the life preserver (structured settlement). The sail should then be set to take advantage of non-guaranteed investments. Choosing who manages these funds and/or how to invest them is not a decision that needs to be made immediately, at the time of settlement.

A balanced settlement plan provides a way to move forward to new vistas.

STEP THREE –
BON VOYAGE

The events that lead to settlements are often traumatic in the extreme. The settlement process itself can be fraught with antagonism, poor communication and misunderstanding. In many situations, moving forward will not be easy, and happiness is something far over the distant horizon. However, a BALANCED settlement plan provides a way to move forward and to hopefully find new vistas that can’t be seen from your current position. 

RINGLER settlement advisors are highly trained and experienced in crafting plans that take advantage of available collateral resources, Special Needs Planning opportunities and good old-fashioned common sense. We help create plans that are sleek and seaworthy, all at the same time. Make no mistake, there will be storms – financial markets can be subject to both short-lived squalls and devastating hurricanes. Contact your Ringler Settlement Advisor to help you through the settlement process and find smooth sailing in your future.