A structured settlement, in the most basic definition, is an arrangement made with a plaintiff in a personal injury lawsuit that allows the plaintiff to recover their judgment over a longer stretch of time instead of as a single lump sum payment. There are specific reasons why a structured settlement can be a very good option, and there are situations where a structured settlement probably isn’t worth it.
First off, it’s important to understand the overall benefits of a structure settlement. With a structured settlement, you are not required to pay taxes on the disbursements. This avoids the large tax payment you would probably need to make on a lump sum payment.
Receiving a lump sum payment can also make you a target. Whether it’s a long lost relative who suddenly has a need for cash, or whether it is a con artist that follows court proceedings to find potential victims, a structured settlement helps you avoid some of the hazards of a lump sum payment.
A structured settlement can also help provide security to you. With a lump sum, there is always the danger that you could make a poor investment and lose it all, or that you could simply overspend. A structured settlement insures that you receive compensation over the long haul.
On top of all of that, a structured settlement can also be beneficial for the defendant. In many cases, a defendant may not have enough to pay a lump sum. This can help to insure that you’ll actually receive your payment.
There are many factors that should go into the decision on whether or not to accept a structured settlement. For example, if your ability to work has been diminished because of the personal injury, you may definitely want to consider a structured settlement. The same is true if it is expected that your health will continue to deteriorate over time. If your medical liabilities will increase, it is important to have a way, in the future, to cover them.
On the other hand, if you have accrued a large amount of debt as a result of your personal injury, it can be worth considering a lump sum payment. Also, a lump sum payment may allow you to, over time, actually receive more money if you can invest it wisely. Weighing all of these factors with your family, attorney and financial planner can help you decide whether a structured settlement is right for you.
Edward Cunningham is an experienced personal injury claims writer with a number of years experience. He has written several articles on accident injury claims.