When you have been involved in an accident and sustained an injury, there are many ways in which you may receive compensation from the liable party. Usually, this will come in the form of a lump sum payment, or when the defendant’s insurance company makes one single payment to you that settles the case. However, some plaintiffs will be given the opportunity to be paid in a structured settlement. These are a bit different because they involve paying out part or the entire settlement amount to the plaintiff over a period of years.
Structured settlements are based primarily on negotiation. Some things that you will have to consider in your case include the length of the structure, how often you want to receive money, how much money you want in each payment, and whether you want a lump sum payment at the end. If you pass away before the set amount of years are up, your heir will continue to receive your payments if you have things set up this way. There are many advantages and disadvantages to the system, which we will show you today.
What Are the Positive Aspects of a Structured Settlement?
- A plaintiff may receive a substantial tax benefit because a personal injury settlement is actually tax-free.
- Structured settlements will give the plaintiff a pay-out over a period of time, which sometimes benefits them most.
- If you choose the structured settlement option, you may still have a chance to also receive a lump sum payment. This will help you with immediate expenses like medical bills and rehabilitation costs.
What Are the Negative Aspects of a Structured Settlement?
- These settlements may have some exceptions of the tax rule, meaning that punitive damages and some attorney’s fees may be taxed.
- Unknown changes in the economy could lead to a sudden, drastic change in payments and a plaintiff may receive less.
- Insurance companies are sometimes reluctant to disclose how much they would have to pay to buy an annuity to cover the settlement, which means that an attorney can’t make a complete assessment of the benefits of the offer.
Because structured settlements can be complicated, you do not want to handle the case on your own. This is why, if you have been injured in an accident, you should speak to an attorney that understands the ways of the law. Call us today.