If you’ve been the victim of a personal injury accident, you’ve had your fair share of pain. Now, as you work to heal, you’re probably a part of a lawsuit to get your expenses covered and compensation for the accident.
One of the decisions you’re likely going to need to make, or that may be offered to you, is how to take your settlement.
Do you want a lump sum settlement or a personal injury structured settlement? It will be essential to consider your financial plan and your current and long-term needs before deciding.
If you don’t know much about a structured settlement, read on to learn more.
What Is a Structured Settlement?
When you’re involved in a lawsuit and the person you’re suing either loses in court or agrees to a settlement, they must pay you. They could pay you in one lump sum.
Or they could pay you in payments over a long period of time. This provides a tax-free revenue stream for you over an extended period of time instead of getting the money all at once.
It also provides long-term financial security.
How Do Structured Settlements Work?
When you agree to compensation in the form of a structured settlement, you get the money from the settlement over a period of time. Instead of the money being paid to you in one lump sum, it’s spread out.
There are various ways settlement could be paid out; more on this shortly. When you take a lump sum, there’s the risk of spending the money too quickly. If you opt to invest it yourself, it could be subject to taxes.
A structured settlement is paid out through an annuity, which saves the recipient from paying taxes on the money.
View more about settlement payouts here.
Payout Options for a Structured Settlement
The structured settlement can be arranged for payment in a variety of ways. You can have your attorney negotiate the structure as part of the settlement.
One option is the large initial payment with smaller subsequent payments over time. This allows the recipient to pay off medical bills and other expenses. Then still have a supplement to their income for a set period of time.
You can also set up the settlement to get a set amount yearly, but the settlement also includes some more considerable lump sums for bigger expenses. This might be useful if you’re the injured party and have kids to send to college.
You can also set up the settlement to increase or decrease over time. Some opt for a delayed payout and get the settlement amount at retirement age.
You need to consider both your immediate needs and long-term needs when deciding the best option. You also need to consider how your injury will impact your ability to work in the future.
Personal Injury Structured Settlement, Is It Right for You?
A personal injury structured settlement is one option to consider when you know working in the future will be difficult as a result of your injury. It provides you with financial security over a longer period of time.
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