Did you recently win a personal injury case? Did you settle your case? Are you in the process of filing a lawsuit?
If you answered yes to any of these questions, you need to learn as much as possible about the compensation you may be able to receive.
You have the right to receive your compensation as a series of payments or a one-time lump sum. If you opt for a series of payments, this is known as a structured settlement.
Whether you choose a structured settlement or a one-time lump sum is up to you. You should speak with your attorney about your options, while focusing on the pros and cons associated with each one.
Before you do anything, you need to understand how a structured settlement works.
As the name suggests, this means that you agree to receive payments over the course of a predetermined number of years. An example of this would be if you win $250,000 and sign an agreement to receive $50,000 per year for the next five years.
When designing a structured settlement, there are several options you need to consider:
- Initial payment. In some cases, you may be able to design a structured settlement to receive a large lump sum of money upfront. This can come in handy if you are currently faced with mounting bills, such as those for medical expenses related to your injury.
- Extraordinary expenses. With some structured settlements, you’ll receive an annual payment along with another amount for extraordinary expenses, which can include things like college tuition.
- Payments that increase over time. Did you know that you can opt for a structured settlement that starts with low payments but consistently grows over the years?
- Payments that decrease over time. Just the same as a structured settlement with payments that increase over time, this is also an option. It starts with high payments, with these decreasing with each passing year.
Is it the Right Choice?
Although a structured settlement is an option to consider, you also need to learn more about taking a lump sum payment. It’s never easy to make a final decision, which is why you should consult with your personal injury attorney as well as a financial planner. These professionals can help you make the best decision based on your current situation as well as your future wants and needs.
Here are some questions you can answer to help you make a final decision:
- What is the tax obligation associated with each type of payment? You need to know if your settlement is tax free or if you will be required to pay taxes on the money as you receive it.
- What are your plans for the money? Some people need a lump sum of cash to pay for current expenses. Others realize that it would be better to receive the money over time, as this gives them the opportunity to pay for regular expenses as they come up.
- Are you okay with the idea of managing a large lump sum of money? It may sound like a dream come true to receive all your settlement at once, but this is only the case if you’re able to manage the money in the appropriate manner.
By answering these types of questions, you’ll find it easier to make the choice that best suits your personal and financial needs.
You never want to make a poor decision when it comes to compensation you receive from a personal injury lawsuit. Instead, you should use this money to better your life, both now and down the road.
At our law firm, we do whatever it takes to help you receive the compensation you deserve. Furthermore, we can help you better understand the pros and cons of a structured settlement.
If you have any questions about personal injury law, such as how to file a claim, you are in the right place. Once you contact us, we’re more than willing to step in and provide you with all the help you require. From there, you’ll feel confident in your ability to receive compensation and use the money to improve your life.
- Neither Age Nor Health Determines Whether You Need an Estate Plan - January 19, 2022
- Tax Planning for 2022 - January 12, 2022
- The Questions of Estate Planning, Part 6: Why - January 6, 2020