A settlement is when a plaintiff settles a case for an agreed upon amount of money. It is paid in one lump sum. Sometimes the plaintiff’s attorney will advise them to receive the payments in installments rather than one lump sum. This is called structures settlement. The payments can be arranged in virtually any way the plaintiff chooses. It can be made in a lump sum every couple of years, or once a year for a number of years.
There are both advantages and disadvantages of choosing a structured settlement. One significant benefit is to avoid heavy taxing. If it is set up correctly, it can be taxed much less, or in some cases, not at all. Sometimes, if your settlement is needed to pay for ongoing care, a structured settlement can help to make sure the funds are there for treatment. Minors may benefit from a structured settlement to protect them from themselves. Large sums of money tend to make us lose sight of future implications. A structured settlement can insure that the money lasts, and is used for its intended purposes.
Disadvantages may include feelings of being tied down by periodic payments. Perhaps you want to buy a house but can’t borrow against a structured settlement in order to get a large sum at one time. Also, some may actually do better to receive the large lump sum settlement and investing it themselves. Not everyone needs protection from themselves, and are very good with their money, and invest it wisely.
There are several things to consider when deciding what kind of settlement is best for you. First, be aware that structured settlements can be very profitable for insurance companies, as they can have large commissions. Make sure your settlement agreement does not consume and inappropriate amount of the sum. Unfortunately, many people who receive large settlements for personal injury or worker’s compensation may have a shortened life expectancy. It is important to consider this when choosing a settlement plan. Make sure that you agree on a plan that provides larger payments over a shorter amount of time, or that the remainder of the settlement will be rolled over into your estate and not forfeited to the insurance company in the event that you pass.
Deciding on a whether or not a structured settlement is right for you can be confusing and frustrating. A personal injury attorney can help you to navigate your options. Call The Advocates to discuss your case today.