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What is a Personal Injury Annuity?

In a successful personal injury lawsuit, whether it settles out of court or goes all the way to trial, the defendant is ordered to pay the plaintiff compensation for the costs related to the injury. The defendant or the defendant’s insurer typically pays in a lump sum. In some cases, a plaintiff’s cash award is structured as a combination of a lump sum and an annuity, where a series of fixed payments are made over a certain period of time.

How does an annuity work?

Annuities are a kind of insurance product that guarantees a series of payments over the term of the annuity. The annuity might pay out over a beneficiary’s lifetime, or it may be tied to a certain amount of principal that continues to be paid to the beneficiary’s heirs until it is fully paid. The details of an annuity are highly flexible and can be negotiated as part of settlement discussions. The annuity’s total value, payment schedule, and many other details can be adjusted to meet the plaintiff’s needs. Annuities are managed by specialized insurance firms. Because they are complicated financial instruments, annuities often need to be crafted with the help of accountants and other experts who can advise clients on how the value of payments will change over time. A $1,000 monthly payment today will be worth substantially more than the same amount in twenty years. Understanding this principle is a key part of evaluating whether an annuity is the right choice for the plaintiff to accept.

Why an annuity?

Annuities are often a component of a structured settlement, negotiated between the parties. They may come up in contexts where the defendant’s financial resources, including insurance, can’t cover a lump sum payment for the entire amount owed to the plaintiff. During negotiations it may become clear that the defendant’s alternatives are to provide an annuity or to declare bankruptcy in hopes of escaping an unmanageable debt. An annuity can be significantly cheaper than a lump sum payment because its cost is based on the future value of current dollars. Plaintiffs may also prefer annuities to lump sums. A large lump sum payment can trigger significant tax consequences in some circumstances, resulting in a substantial loss of value. A lump sum also poses a practical and behavioral risk for the plaintiff. Someone who receives a check for $2 million may be tempted to spend the money on things other than medical care, even though medical bills are expected to continue to pile up for many years to come. By spreading out payments over a period of time the plaintiff often has an easier time managing the settlement funds. A potential downside of annuities is that if the company that provides the annuity goes out of business, the annuity will vanish.

GGRM is a Las Vegas personal injury law firm

For more than 45 years the law firm of Greenman Goldberg Raby Martinez has represented clients in personal injury cases. Our attorneys are available for free consultations to discuss your injury and your potential settlement options. We can be reached at 702-388-4476, or ask us to call you through our contact page.

Potential Tax Consequences of Personal Injury Settlements

The goal of a personal injury lawsuit is not to make the injured person rich. Rather, it is to ensure that the injured person doesn’t have to bear the cost of injuries caused by someone else’s negligence or misdeeds. Most lawsuits settle out of court, often with the result that the defendant enters into an agreement to make one or more payments. The payments may be made directly to health care providers who are owed for services already rendered, or they may go directly to the plaintiff to help offset the cost of future care or other damages. A key question is the extent to which settlement payments are taxable for federal tax purposes. Predictably, the answer to the question of whether settlement payments are taxable income is: it depends. Specifically, the answer depends on the nature of the payments (i.e., what they are compensating the plaintiff for) and, sometimes, how the expenses they are covering were reported on prior tax returns. The IRS provides some insights in Publication 4345 with respect to certain specific types of compensation:
  • Medical expenses. The portion of a settlement that can be attributed to medical expenses related to the injury is not taxable unless expenses were included as an itemized deduction on a prior year’s tax return. If a deduction was taken that portion of the settlement may be taxable. Essentially, once a deduction is claimed a taxpayer can’t double up on recovery by also receiving a settlement payment for the deducted amount. For settlements covering multiple years of care, the taxpayer will need to follow a process to allocate the settlement across each year of expenses and make a report of income accordingly.
  • Emotional distress and mental anguish. As with medical expenses, noneconomic damages for emotional stress or mental anguish are not ordinarily taxable provided they originated from a physical injury or illness. This proviso is can create interesting questions if psychological harms covered by the settlement aren’t related to an injury itself but might be traced to another cause. Note, however, that such awards are subject to adjustments for related medical expenses (i.e., such expenses may still be deducted as usual).
  • Lost wages and lost profits. A settlement that includes a payment for lost wages or lost profits will be taxable in the same way as though those amounts were earned in the ordinary course of work. Lost wages are also subject to employment (social security and Medicare) taxes.
  • Interest. Many settlements are structured in such a way that the defendant pays a certain regular sum over a period of time. In a structured settlement the defendant often pays a certain interest rate on top of the principal. In such cases, the interest component of the payments is taxable income.
  • Property damage. If a settlement also includes compensation for property damage, it will be taxable only if the payments are greater than the taxpayer’s basis in the property. Basis is a tax term that in simple terms means the value that the taxpayer originally paid for the property, plus any costs paid into it. For example, a person who buys a valuable work of art for $5,000 has that amount of basis in the piece. If the art has appreciated to be worth $50,000 when it is destroyed, receiving compensation for the full value may trigger income tax for the $45,000 difference.
These rules only scratch the surface of the important tax considerations that can come up during a settlement negotiation. Making sure that a settlement is structured to minimize tax consequences is an important part of a personal injury attorney’s job. For more than 45 years the law firm of Greenman Goldberg Raby Martinez has represented Las Vegas clients in personal injury cases. For a free attorney consultation about your case call us at 702-388-4476 or contact us through our site.

Medicaid and Personal Injury Lawsuits in Nevada

In the course of a personal injury lawsuit the aim is always to get the injured person the care they need and financial compensation for the costs associated with the injury. In the course of every case a client works with attorneys to make decisions that can have long-term consequences. Clients who are Medicaid recipients often face a crucial choice between pursuing financial compensation and staying eligible for Medicaid. Medicaid is a need-based program that offers health insurance coverage to individuals who might not otherwise be able to afford it. In Nevada a household with an annual income that is up to 138% of the federal poverty level may qualify for the program. The federal poverty level varies according to the number of individuals in a household. For a family of four in 2018 a household making up to $33,383 annually may qualify for Medicaid coverage. Note that the Children’s Health Insurance Program, or CHIP, extends coverage to children in households with annual incomes up to 200% of the poverty guideline. A financial award resulting from a lawsuit, whether obtained through settlement negotiations or as the result of a trial, is a financial asset of the prevailing plaintiff. This is true even if a significant portion of the award will go toward outstanding debts. Medicaid recipients are required to report the change in their available resources to the Department of Health and Human Services by the fifth day of the month following the finalization of the award. Quite often these awards exceed the qualifying threshold for Medicaid, meaning a plaintiff must choose between continuing to qualify for Medicaid or accepting the award. However, there are alternatives to losing Medicaid coverage:
  • For relatively small awards a plaintiff may have the option of simply spending enough money within the month to stay below the qualifying maximum.
  • Recipients of larger awards may have the option of forming a special needs trust. A special needs trust is a separate legal entity that is created to own assets for the benefit of a person who receives needs-based assistance, like Medicaid and Supplemental Security Income (SSI). Assets placed in the trust can only be used for specific purposes that Medicaid doesn’t cover. Special needs trusts are subject to complex rules and need to be crafted by an attorney.
  • Plaintiffs can use awards to pay off debts owed under caregivers’ service contracts provided that the contracts are properly drafted. There can be a range of consequences for doing things this way, which a lawyer can help the plaintiff understand.
Medicaid recipients who have been injured in an accident should not hesitate to talk to a personal injury attorney. For more than 45 years the law firm of Greenman Goldberg Raby Martinez has helped injured clients recover compensation. If you would like to speak to an attorney about your injury, call us today for a free consultation at 702-388-4476 or reach us through our contact page.

How Defendants May Use Bankruptcy to Avoid Paying Judgments

Defendants in personal injury lawsuits can end up owing the plaintiff a significant amount of compensation, whether as part of a settlement or as a consequence of a court judgment. In simplified terms, the successful plaintiff becomes a creditor of the defendant. One concerns that successful plaintiffs may have is that defendants may seek to reduce or eliminate their debt obligation by discharging it through personal bankruptcy. There are several kinds of bankruptcy, which are named after the applicable chapter of Title 11 of the U.S. Code, also referred to as the U.S. Bankruptcy Code. For individuals, the two forms of bankruptcy are Chapter 7 and Chapter 13. The mechanisms and requirements of these two forms of bankruptcy are quite different.
  • Chapter 7 bankruptcy is for debtors who lack the income necessary to pay at least some of their debts. If the debtor is already barely staying afloat when the judgment comes down, Chapter 7 might be available. A Chapter 7 bankruptcy forces the debtor to sell off or surrender property for which there isn’t an exemption. The debtor uses the resulting proceeds to pay off as much of the debts as possible, leaving only a small, exempted amount for the debtor’s own use. After the debtor has paid what he or she can, the rest of the debts are discharged. At the end of the process if a creditor cannot be paid because there is nothing left, the creditor may be out of luck.
  • Chapter 13 bankruptcy is the option available for people who do not satisfy the debt-to-income requirements of Chapter 7. Chapter 13 is more favorable to plaintiffs because it does not result in debts being discharged for good. Instead, the Chapter 13 debtor is required to adopt a repayment plan that is compatible with the debtor’s income. A Chapter 13 repayment plan is overseen by the bankruptcy court and a trustee, and may last up to five years.
Both types of personal bankruptcy involve all of the debtor’s credit obligations, meaning the plaintiff’s award gets thrown in with other forms of debt, like mortgages and car payments. One consequence of this is that the successful plaintiff may end up behind other, higher priority creditors in the process. For example, if a mortgage lender has a lien on the debtor’s home, the home’s value may be out of the plaintiff’s reach. A personal injury plaintiff is a sympathetic creditor and may receive some discretionary priority from a bankruptcy court, but the law of secured debt can limit the size of the potential asset pool available to pay all creditors. Plaintiffs in drunk driving cases should note that bankruptcy law prohibits bankruptcy courts from discharging debts associated with injuries caused by drunk drivers. Such debts are on a list of nondischargable debt that also covers student loans, most taxes, and government debts. Bankruptcy is designed to ensure that the debtor does not come out of the process with nothing. The idea is that debtors get another chance to “start again.” For a personal injury plaintiff this can feel unfair, especially in a Chapter 7 bankruptcy case where the debt ends up wiped away. As a consequence, plaintiffs’ attorneys need to anticipate the ability of the defendant to pay as part of their legal strategy. For example, it may make strategic sense to enter into a settlement with provision for securing the debt voluntarily, so it is harder to discharge through bankruptcy. The law firm of Greenman Goldberg Raby Martinez has helped injured clients in the Las Vegas area recover compensation for over 45 years. If you have questions about your personal injury case, call us today for a free attorney consultation at 702-388-4476 or send us a request on our contact page.

Preventing Ongoing Injuries with an Injunction in Nevada

Injunctions are a special form of legal remedy that effectively orders someone to stop doing something wrongful, backed up with the threat of fines or even jail time for violating the order. Unlike other forms of litigation, where the plaintiff seeks financial compensation for injuries, an injunction often can be relatively quick and inexpensive. When someone is continuously behaving badly, asking a court to intervene can be an effective means of putting a stop to it.

What is required to obtain an injunction in Nevada

A civil injunction can be obtained by filing with state court a complaint that meets certain requirements. Under NRS 33.010, case law, and Nevada’s Rules of Civil Procedure, an injunction may be granted after the court’s consideration of the following factors:
  1. The plaintiff must show a reasonable probability of success on the merits with respect to the underlying legal dispute.
  2. The plaintiff must demonstrate that if the injunction is not issued it will suffer irreparable harm for which money damages will be inadequate.
  3. The injunction is appropriate in light of the relative hardships of the parties and the public’s interest in stopping the behavior of the defendant.
  4. The injunction’s purpose is to preserve or restore the status quo; that is to say, it works to put the plaintiff into the condition that existed without the wrongful behavior.
  5. Some types of injunction must be supported with a security bond to protect the defendant against the possibility of an improperly granted injunction.

The types of injunction

The term “injunction” actually covers a number of different types of relief that are available to plaintiffs depending on the kind of injury they are seeking to resolve, the duration of time the order should cover, and the nature of the legal posture of the parties.
  • Restraining (or protective) orders are issued to prevent people from threatening, harassing, or stalking others.
  • Preliminary injunctions are issued in connection with ongoing litigation to prevent an alleged wrong from continuing while the lawsuit is resolved.
  • Temporary injunctions are short-term court orders that can be obtained relatively easily and potentially without involving the other party.
  • Permanent injunctions, as the name suggests, are a lasting order to stop the bad behavior. A permanent injunction can only be obtained after a litigation process in which the defendant gets to present arguments against the injunction. Permanent injunctions can be accompanied by financial compensation in many situations.

When an injunction can be appropriate

An injunction can be a useful remedy to many kinds of disputes. A common use of injunctions is to stop threatening, abusive, or harassing behavior. They are also useful for stopping behavior that is doing damage to property or threatens health and safety. Each case will need to be evaluated on its merits. The law firm of Greenman Goldberg Raby Martinez has helped clients in the Las Vegas area protect their legal rights for over 45 years. If you have questions about how an injunction might be useful in your situation, call us today for a free attorney consultation at 702-388-4476 or send us a request on our contact page.

Suing to Recover the Value of Lost Business

Owners of businesses, especially when the business is dependent upon the owner’s involvement, often stand to lose a lot when an injury forces them to stop working. A sole proprietor may lose more than just a salary; the business may lose clients or may be forced to close, depriving the entrepreneur of potential long-term growth. In a personal injury lawsuit the value of lost business can become an important component of the plaintiff’s damages claim. The value of lost business is a category of economic damages. Economic damages are available to plaintiffs in every type of personal injury lawsuit. One reason this is true is that economic damages can be calculated with a certain degree of accuracy, ensuring that the defendant is not unfairly made responsible for financial consequences that are beyond the scope of the injury he or she caused. A key problem for plaintiffs who wish to recover compensation for lost business is that the damages must be proven with sufficient reliability to be used by the court in assessing the plaintiff’s final damages award. Estimating lost future earnings can be especially tricky. There are a number of considerations that might go into this analysis, including:
  • The business’s history. The business’s earnings history is of central importance in determining how much revenue was potentially lost as a consequence of the plaintiff’s injury. A longer track record makes historical data more useful. Newer businesses may need to rely on third-party projections to calculate lost earnings.
  • Contingent profits. Although the plaintiff would like to argue that the business was going to grow exponentially and be wildly successful, fairness dictates that the damages award factor in a reasonable probability that the business would not always maximize its profits. This can be especially important for cases where the plaintiff seeks compensation for long-term lost profits.
  • Other sources of recovery. If the business also carried insurance against the possibility of the plaintiff’s injury the amount the insurance paid will probably reduce the amount the defendant is liable for.
In some cases establishing a firm measure of a business’s lost profits can require the assistance of an expert witness. Forensic accountants assist litigators with matters such as these, using well-established standards to develop theories of lost earnings that will stand up in court. Whether a given plaintiff needs the help of an expert witness will depend on the specific facts in the case. For more than 45 years the law firm of Greenman Goldberg Raby Martinez has helped injured clients recover compensation. If you have suffered a personal injury that has involved business losses and would like to explore your legal options, call us today for a free attorney consultation at 702-388-4476 or reach us through our contact page.

Preventing Ongoing Injuries with Injunctions in Nevada

Injunctions are a special form of legal remedy that effectively orders someone to stop doing something wrongful, backed up with the threat of fines or even jail time for violating the order. Unlike other forms of litigation, where the plaintiff seeks financial compensation for injuries, an injunction often can be relatively quick and inexpensive. When someone is continuously behaving badly, asking a court to intervene can be an effective means of putting a stop to it.

What is required to obtain an injunction in Nevada

A civil injunction can be obtained by filing with state court a complaint that meets certain requirements. Under NRS 33.010, case law, and Nevada’s Rules of Civil Procedure, an injunction may be granted after the court’s consideration of the following factors:
  1. The plaintiff must show a reasonable probability of success on the merits with respect to the underlying legal dispute.
  2. The plaintiff must demonstrate that if the injunction is not issued it will suffer irreparable harm for which money damages will be inadequate.
  3. The injunction is appropriate in light of the relative hardships of the parties and the public’s interest in stopping the behavior of the defendant.
  4. The injunction’s purpose is to preserve or restore the status quo; that is to say, it works to put the plaintiff into the condition that existed without the wrongful behavior.
  5. Some types of injunction must be supported with a security bond to protect the defendant against the possibility of an improperly granted injunction.

The types of injunction

The term “injunction” actually covers a number of different types of relief that are available to plaintiffs depending on the kind of injury they are seeking to resolve, the duration of time the order should cover, and the nature of the legal posture of the parties.
  • Restraining (or protective) orders are issued to prevent people from threatening, harassing, or stalking others.
  • Preliminary injunctions are issued in connection with ongoing litigation to prevent an alleged wrong from continuing while the lawsuit is resolved.
  • Temporary injunctions are short-term court orders that can be obtained relatively easily and potentially without involving the other party.
  • Permanent injunctions, as the name suggests, are a lasting order to stop the bad behavior. A permanent injunction can only be obtained after a litigation process in which the defendant gets to present arguments against the injunction. Permanent injunctions can be accompanied by financial compensation in many situations.

When an injunction can be appropriate

An injunction can be a useful remedy to many kinds of disputes. A common use of injunctions is to stop threatening, abusive, or harassing behavior. They are also useful for stopping behavior that is doing damage to property or threatens health and safety. Each case will need to be evaluated on its merits. The law firm of Greenman Goldberg Raby Martinez has helped clients in the Las Vegas area protect their legal rights for over 45 years. If you have questions about how an injunction might be useful in your situation, call us today for a free attorney consultation at 702-388-4476 or send us a request on our contact page.

Suing an Estate for Personal Injury Damages in Nevada

Suing an Estate for Personal Injury Damages in Nevada
Someone who is seriously injured by another person’s negligent or reckless behavior is hopefully able to recover compensation. But if the responsible person dies before a case is resolved, the injured person may need to sue his or her estate. In some ways an estate is just like any other defendant, but lawsuits against estates involve some special issues. At the most basic level, after someone dies their assets are generally used to pay off the deceased person’s debts, with anything left over going to the person’s heirs. Past this basic framework, however, an estate can be quite complicated. Here are a few potential issues a plaintiff may face:
  • Probate. When a person dies with assets that aren’t held in a trust their assets are placed into the administrative process of a probate court. The probate process is intended to provide an orderly way for creditors of the deceased person to make claims against the assets in an estate. The estate’s personal representative, who may be a family member of the deceased or the deceased’s lawyer, is responsible for notifying creditors of the estate about when and where hearings will be held to resolve claims.
  • Trusts. A trust is a type of legal entity that some people use to shield assets from estate taxes and, potentially, creditor claims. A common form of trust, the revocable living trust, does not protect assets from creditors. But high net worth individuals often set up more supplicated vehicles, like spendthrift or “domestic asset protection” trusts, which provide a more airtight protection against creditor claims on property left in the trust for a period of time.
  • Tight deadlines. Public policy demands that estates be settled reasonably quickly. That means that deadlines for making claims against an estate can be quite tight. For example, unless otherwise permitted by the court a creditor who receives notice of an estate going into probate has only 90 days from the date of notice to file a claim. NRS 147.040.
  • Restrictions on continuing lawsuits. A plaintiff against a deceased defendant must comply with all of the rules that apply to a creditor in probate. What’s more, a plaintiff in an ongoing lawsuit against someone who dies must show “good cause” for the lawsuit to continue against the estate in probate. NRS 147.100.
  • Other creditors. After someone dies there are often a range of creditors who will seek to claim a part of the deceased’s estate. Lenders for mortgages and education costs will have sophisticated help at their disposal to protect their interests. The injured plaintiff must have good representation to compete with these behemoths.
  • Fraudulent transfers. If the deceased person tried to shield assets from the injured plaintiff’s claim by giving them away—for example, by gifting a large chunk of money to a child—the plaintiff will need to bring the transferees of such assets into the case to seek recovery of the assets that, in legal terms, were fraudulently transferred (that is, transferred to avoid being subject to the plaintiff’s claim).
  • Out-of-state assets. Quite often someone who dies will own property outside of Nevada. Pursuing claims against those assets can involve working with local counsel in other states to ensure that local rules are satisfied.
Navigating these and other complex issues requires careful work by the lawyers who represent the injured plaintiff. Greenman Goldberg Raby Martinez has helped clients get compensation in personal injury cases for over 45 years. If you have been injured and would like to explore your legal options, reach out to us today. For a free attorney consultation call us at 702-388-4476 or contact us through our website.

The Collections Process Following A Successful Lawsuit

The Collections Process Following A Successful Lawsuit
Successfully suing the person or business who is responsible for causing a personal injury takes time and expertise. For cases that don’t settle but instead go to trial, success for the plaintiff means obtaining a court judgment against the defendant. In a personal injury case the court order typically requires the defendant to pay the expenses associated with an injury—medical bills, lost earnings, and other costs that have been or will be incurred by the plaintiff during the recovery process. But a court’s judgment is just a piece of paper. Collecting on a judgment often requires more.

A court judgment is not always a remedy

Many injured plaintiffs are often disappointed to learn that a court’s favorable ruling doesn’t immediately resolve the financial challenges associated with their injuries. Unless the defendant raises a valid appeal, a court’s judgment is a binding order against the defendant. The plaintiff has become a creditor of the defendant, similar to a lender. But some defendants refuse to pay, perhaps because they lack the financial resources to do so. When that happens, the plaintiff is responsible for ensuring that the judgment is enforced. The court will not, by itself, take further steps to force the defendant to pay.

Strategies for collecting on a judgment

In Nevada a prevailing plaintiff has six years from the date of the court’s order to enforce a judgment. If enforcing the judgment is taking longer than six years the plaintiff can request an extension of time. NRS 11.190(1)(a). There are several paths a creditor can pursue to recover on a judgment in Nevada.
  • Wage garnishment. In Nevada creditors can obtain a court order to garnish a delinquent debtor’s wages (a so-called writ of garnishment). A wage garnishment order requires an employer to withhold money from the debtor’s paycheck and instead pay it to the creditor. State law places a strict cap on how much of a person’s wages can be garnished: 25% of the debtor’s disposable earnings, or the amount by which the debtor’s earnings exceed 50 times the federal minimum hourly wage, whichever is less . NRS 31.295. Of course, in many situations a defendant will not have earnings sufficient to compensate the plaintiff for anywhere close to the amount of a judgment.
  • Seizing property. A creditor may also ask the court to issue a writ of execution against certain property of the defendant, which allows the creditor to take possession of the property. A writ of execution must specify the property to be seized, such as cash in a certain bank account, a certain car, or other property. Writs of execution are subject to a range of rules and procedures, in part to ensure that a bank or other institution can rely upon them when handing over an individual’s assets. They are also subject to a wide range of exceptions to ensure that the debtor isn’t left homeless or unable to provide for dependents. See NRS Chapter 21.
  • Filing property liens. Another option for creditors is to file liens against certain assets of a debtor. A lien places a publicly available claim on property, such as a car or a piece of real estate, that must be cleared before the owner can sell the property. It can be an effective backstop against a debtor who owns a home, because the lien will complicate selling the home or using it as collateral on a loan.

GGRM helps clients get the compensation they deserve

For over 45 years the law firm of Greenman Goldberg Raby Martinez has represented injured clients in the Las Vegas area. We are passionate about helping our clients get back on their feet after an injury. That often involves taking steps to enforce a judgment. If you have been injured or you’re having difficulty collecting on a judgment, call us today for a free attorney consultation at 702-388-4476 or send us a request on our contact page.