Do You Need A Lump Sum or Structured Settlement?

court jurisdiction If you are involved in a personal injury case and you are either negotiating with the negligent party, mediating, or going to trial, one question you might want to ask yourself and especially ask your lawyer is the difference between a lump sum settlement and a structured settlement. Each of these types will impact your life in tremendous ways and know the difference between will greatly affect how you plan your future financial plans.

What is a Lump Sum Settlement?

After you’ve either come to an agreement with the third, negligent party or a verdict in a trial, you might receive a lump sum payment for you settlement. This means you get the amount the case was worth all at once.

How Do You Get Your Settlement?

The process is pretty simple. The money will be transferred to your attorney’s account where he will then deduct his attorney’s fees and transfer the rest to you or write you a check.

The Pros and Cons

The benefit of a structured settlement is that you’ll get all your money at once and be done with the process. With any settlement you don’t have to worry about taxes unless there are punitive damages involved. Lump sum settlements are beneficial when you are involved in an injury where your damages and expenses can be remedied quickly and will not prolong in the future. If you have an injury that is going to cost you money for years in the future it might be better to consider a structured settlement.

What is a Structured Settlement?

After you’ve come to an agreement with the third, negligent party or a verdict in a trial, you might receive a structured settlement. This means the amount you are awarded is distributed to you in continuous periodical payments. Sometimes this might be yearly lump sum payments, monthly payments, or both. The structured agreement can be arranged however you and the party agree upon or however the verdict states.

How Do You Get Your Settlement Payments?

The process of obtaining your payments is a bit more tricky. The money will be transferred to a third party assignee which is usually an annuity company. The annuity purchases the settlement and distributes it according to the agreement.

Lawyer fees will be taken out either in the first lump sum payment or as a percentage of the periodic payments depending on your agreement.

The Pros and Cons

The benefits to having a structured settlement is that you usually have an expert who has assessed your case and determined the amount of money you will need in the future. Research shows that lump sum settlements are generally spent in less than 5 years. Therefore, structured settlements will prevent the overspending of money by providing more “structure” in your life.

The obvious cons are having to wait for the money. However, theses settlements should be agree on when the case involves injuries that have caused long lasting effects. The point is to provide you with the money you need in the future not just compensate you for a lump amount.

Which Should You Choose?

The obvious choice will depend on the nature of your case. Do you have serious property damage or injuries that are going to require medical care for years to come? The best thing you can do is talk to your personal injury lawyer and find out which is going to be best for your case and you well being.

If you want to know more about your case or possible settlements for a case, call us for more information and we’ll help you  find what you need know to get the compensation you deserve.