After you have won your personal injury case or reached a settlement agreement, you must still make important decisions regarding how you will receive your compensation. Several settlement options are available, and it is crucial to understand the pros and cons of each before making a decision.
Lump Sum Payment
A lump sum payment is a one-time payment that covers the entire amount of your settlement. This option allows you to receive your compensation in full and quickly without worrying about future payments or delays. It can be especially beneficial if you have immediate financial needs, such as medical bills or other expenses related to your injury. A lump sum payment may not be the best option for everyone. If you have suffered severe injuries and require ongoing medical treatment or care, a large portion of your settlement may need to go towards these future expenses. In this case, a lump sum payment may not be sufficient to cover all of your needs.
Structured Settlement
A structured settlement is an agreement where the compensation is paid out in regular installments over a period of time. This option can provide a steady stream of income to cover ongoing expenses and allow for better financial planning. One advantage of a structured settlement is that it can be tailored to your specific needs. For example, you may choose to receive larger payments in the beginning to cover immediate expenses, with smaller payments in the future. Additionally, a structured settlement may also have tax benefits as the income is spread out over time. You should consider that a structured settlement may not provide enough compensation upfront if you have immediate financial needs. Also, once a structured settlement is set in place, it cannot be changed or altered.
Lump Sum and Structured Settlement
It is also possible to combine a lump sum payment and a structured settlement as part of your compensation. This option allows you to receive a portion of your settlement immediately while also providing ongoing payments to cover future expenses. The advantage of this option is that it provides immediate funds for current needs and a steady stream of income for future expenses. Carefully consider the terms and conditions of this type of settlement and any associated fees or costs.
Trusts
In some cases, a trust may be set up to manage your settlement funds. A trust can protect your assets and ensure the funds are managed properly over time. This option is often used when the recipient is a minor or has a disability that requires ongoing care. Setting up and managing a trust can be complex and may involve additional fees. It's important to consult with an experienced attorney before choosing this option to understand the implications and responsibilities involved fully.
Learn more from a law firm near you like Craig P. Kenny & Associates.
Share