Personal injury lawsuits are often hard-fought and can take an emotional and financial toll. Once you win your case, there is a lot of relief that the fight is over. You deserve this moment – you fought for your rights, you received justice, and you can get back to living your life. But there are still a few decisions to be made – one of them is to determine whether you wish to be paid via lump sum or structured settlement.
Many people opt for the lump-sum payment option because they receive their money all at once. They can pay off all of the bills which have been mounting since their accident, take some time off work, or make the big needed purchase.
The structured settlement option allows individuals to budget their settlement over a long time, giving them long-term financial security.
Lump-Sum Payment Options
The lump-sum payment structure allows for total control over your financial settlement. If you opt to accept your judgment earnings in a lump sum, you have complete freedom to spend the money however and whenever you decide. With all of the money in the bank at once, you can make long-term investments or significant purchases without needing a loan. However, there is some risk involved with this type of arrangement. For instance, investing a portion of your lump-sum payments may increase your assets – however, in the event of a market downturn, you may lose a significant amount of that money. In taking all of the money up front, market risks, spending, and other factors, may create a greater risk of the funds depleting in a much shorter time than with a structured settlement.
Structured Settlement Options
One of the best reasons to choose a structured settlement is that you have a steady stream of tax-free income guaranteed. Most structured settlements are delivered to the recipient in the form of an annuity. You can obtain these annuities from a third party such as an insurance company or the U.S. Treasury as treasury security. These instruments assist you in earning more from your settlement. The income remains tax-free, even though it gradually maximizes your settlement amount. Annuity payments arrive faithfully every month for that structured amount. The downside to this arrangement is that you can’t change your mind once it is in process. If you are faced with a significant expense in the future, you cannot get more of your money. So although an individual will have the security of a structured, regular payment – they do not have the freedom or flexibility to use their settlement money as they wish.
So Which Should You Choose?
If you are still unsure about which type of settlement is right for you, ask your personal injury attorney if any flexible or hybrid options are available to you in your situation. For example, you may be allowed to accept a partial lump-sum amount upfront to pay outstanding bills, then put the balance in a structured settlement. You can also adjust the amount of time your annuity will last, which could raise your monthly payment amount.
Probinsky & Cole are personal injury attorneys with offices in Sarasota, Tampa, and Orlando. We have helped hundreds of clients achieve victories in their personal injury lawsuits and can give you the professional advice and guidance you need to make these important decisions. Call today to learn more.
