Through the years, our firm has helped many people plan for settlement in sexual abuse cases, including those involving the Boston Archdiocese and Boy Scouts of America, as well as the more recent Michigan sex abuse scandal. By guiding these plaintiffs as they plan their financial futures, we hope to provide just a little positivity in the face of such a dark side of humanity. It’s why we support Bridie Farrell, founder of NY Loves Kids, and her national efforts to educate legislators about why people need to hold accountable their abusers and the organizations that shielded their conduct.
As part of the settlement planning process, we at Milestone advise clients on the basics of financial planning, whether that be focusing on paying down student debt, planning to make a down payment on a home someday, or thinking ahead to retirement. If you are navigating a settlement in a case that is based on sexual harassment or abuse, I would like to share the following three key pieces of advice.
Understand what a sex abuse lawsuit settlement will mean at tax time
First, prior to settlement, you should be informed about whether your settlement is taxable. Back in the day, the IRS’s bruise ruling required proof of ‘‘observable bodily harm’’ to grant a tax deduction on the settlement recovery. But in a 2008 memorandum, the IRS made an exception. Understanding that settlements and jury award payments are typically made years after the abuse of a victim ended, the IRS allowed an assumption that there were physical injuries at one point, even if observable bodily harm could no longer be shown. The circumstances inherent in sex abuse cases are traumatizing enough to have endured without then having to describe them further, (or worse, enshrine them in a legal document) just to protect one from taxation. A settlement expert can clear up any confusion in advance of settlement, in order to offer peace of mind with regard to tax time.
Protect your finances
Second, be sure to take an honest personal assessment of your psychological state when the money in your settlement is going to come in. Now may be the time to speak with a professional therapist. Money can create as many problems as it solves. Keep your settlement secret. (Releasing the information might can only do harm, unless it’s your benevolent grandmother who you know only cares about your wellbeing.)
Lean on those who care about you
Third, many clients go through a kind of grieving process at the time litigation ends. Oftentimes, the money can make the past experience resurface. Be sure to have close friends or family nearby to support you. Also, it’s perfectly OK to acknowledge that you may need more time to understand and agree to your settlement and what it means for you, and to bring closure to this chapter in your life.
Settlement can be a blessing. By working with an advisor you can trust, you’ll be able to focus on ways that the incoming money can make meaningful improvements in your life. If you are approaching settlement, we welcome you to give us a call for a confidential planning discussion.