Financial Planning Following a Compensation Claim

If you are eligible for a compensation payment it is critical to get specialist advice on investing and managing your funds, the money has to last a long time – ideally your whole life!  You will not be eligible for Centrelink benefits for many years, and in some cases you will never be eligible again.

It is recommended that you involve a Chartered Practicing Accountant (CPA) or financial planner before your case settles. If you choose to use a financial planner/advisor check their professional accreditations. It is important to get expert advice to ascertain your goals and the associated costs. Having a plan prior to receiving your settlement funds provides time to set up structures such as Trust accounts, if required, and to obtain necessary documentation required for some investments. A common strategy is to place your settlement funds into superannuation, however the Government only provides a 90 day window to place your personal injury payment into superannuation so it is critical to be prepared.

Managing compensation payments is a specialised area. Many financial advisors have no experience with managing a client with millions to invest, nor do they understand the costs associated with personal care, rehabilitation, medication and accessible accommodation.  Living life with a spinal injury is expensive and your annual costs will be very high if you have personal care and allied health costs.  Remember you will likely lose your access to Government benefits including pensions and carers. You need investment advice that fully considers your cost of living and is constructed to produce reliable and regular income (ie replaces your wage or pension) whilst also growing in value to ensure your funds last as long as possible. Unless financial advisors specialise in this area, it is unlikely that they are aware of the concessions offered to those who receive a personal injury settlement. This could cost you tens of thousands of dollars in additional tax so it is worth spending the time searching for a planner with the right experience.

Spinal WA is not able to recommend any financial planner in particular, but you may like to consider the following when seeking an advisor:

• Ask other people who have already received a settlement about who they use
• Conduct a web search using keywords
• Ask your lawyer or health professional for recommendations

Once you find a planner:

• Ask the planner how many other clients they have advised in a similar situation to you
• Ask to see examples of their work
• Ask the planner to provide you with referrals to clients who you can speak to 

How Much Compensation is Enough?

How do you know if your compensation payment is enough to fund your lifestyle?  Your financial planner should be able to determine your likely costs following settlement and to model or graph these expenses over your lifetime. A quality financial adviser should work with you on budgeting and ways to reduce your expenses without compromising your lifestyle or goals. Make sure your financial planner is able to clearly demonstrate and explain how much you can afford to spend each year and how long your funds are expected to last.

When Do I Need a Trustee?

If you have an acquired brain injury or you are under 18 it is likely the court will require you to have a Trustee. The Trustee will be appointed by the Court, however you can advise your lawyer of your choice of Trustee.

There are also a number of corporate trustees for you to consider.  It is worth meeting with more than one and make sure they have expertise in managing portfolios for clients with a personal injury. Ask your lawyer or financial advisor for more information on choosing a Corporate Trustee.