Learn about the pros and cons of structured settlements in personal injury cases
If you have suffered a serious injury in a car accident, premises accident, defective product mishap, or other type of personal injury accident that was not your fault, you need and deserve compensation to help make you whole after your loss.
Depending on the circumstances of your case, it may be advantageous to settle the matter out of court rather than proceed to litigation. Settling your case will save you the additional time, stress, and lawyer’s fees that going to court would entail. Plus, you can also avoid the uncertainty that comes with litigation. Rather than wondering if you will win your case and how much compensation you will be awarded, you will know exactly how much your settlement is worth before you accept it.
However, even after you have decided to settle your case, there remains one more decision to make: should you accept a structured settlement?
What Is a Structured Settlement?
When it comes to receiving personal injury compensation, there are two options: a lump sum or a structured settlement. With the lump sum, you get everything at once. With a structured settlement, you typically get a smaller lump sum immediately so you can pay your attorney fees and any other pressing expenses, followed by regular payments for a specific period of time. This may be a few years or the rest of your life, depending on the severity of your injuries.
Advantages of a Structured Settlement
Structured settlements can be helpful for individuals who don’t want to manage their own money and instead want the certainty of regular payments. There may also be tax benefits to accepting compensation in smaller chunks. If you are able to spend your payments each year rather than investing a huge lump sum, you won’t have interest and dividend income pushing up your taxes.
From the at-fault party’s perspective, a structured settlement is extremely desirable. By relying on interest to grow the money they put into the structured settlement, they are able to make a smaller initial payment than they would have to make if they paid a lump sum.
Disadvantages of a Structured Settlement
With a structured settlement, you have to wait to get your money. Whether or not this is a disadvantage really depends on your financial goals. If you want to use the funds to make a big move like buying a house or starting a business, or if you want to make some long-term investments that could significantly grow your money, you want all the money up front.
So Should You Accept a Structured Settlement?
In most cases, a lump sum payment is preferable to a structured settlement. A structured settlement really should not even be considered unless the compensation is worth more than $200,000.
However, before you make any decisions you will want to discuss the matter with an experienced personal injury lawyer who can make sure the settlement amount is fair. To learn more, contact The Law Offices of Larry H. Parker at 800-333-0000.