When you are in the middle of a personal injury lawsuit, your mind is in constant motion with questions about all the possible outcomes of your case. Although you might have an experienced personal injury lawyer on your side who is fighting for your rights to compensation, it can be tough putting your mind at ease until the case is completely settled.
Many people are worried about their settlements, and wonder how they will receive their payment in the end. Questions like, “Will I get all my money at once?” and “Is it possible that my compensation will be awarded as a structured payment?” are all common concerns by most personal injury plaintiffs.
A structured settlement is an agreed periodic payment plan in which the recipient receives a set amount of money over a specified period of time; and they are a common result of a personal injury settlement. There are both advantages and disadvantages of structured payments, depending on your particular perspective.
The number one benefit of a structured settlement is that you usually receive more money overall. In a lump sum payment, the amount is usually negotiated lower. Another major benefit is personal financial management. When a large sum of money is paid out overtime, it is typically easier to manage your finances, pay bills, save money, and maintain a positive financial portfolio. It may be especially beneficial in terms of tax liabilities as well.
- Simpler Tax Planning
- Possible Income Tax Advantages
- Additional Annual Income
- Broader Subsidy Opportunities
- Budget Protection
One of the common downfalls to structure pay is limitation. For those consider themselves financially savvy, not receiving your full compensation can be a huge restriction since you cannot use the money to make any lucrative investments. In other cases, a personal injury victim has already paid all of their hospital bills, medical expenses, and other related expenses, out-of-pocket. They have also already incurred lost wages from work; so by not receiving a full payment can be frustrating since victims in this type of situation is simply trying to put the money back where it was before their accident.
The Outcome of a Structured Settlement
If you win your claim and an insurance company agrees to give you a structured settlement, you will not be given a paycheck right away. Instead, you will be paid a set amount over a set period of time. The terms of structured settlement agreements vary from case to case, and payment amounts and schedules can be set in many different ways. These payments generally begin as soon as all the paperwork is processed; however, this time period can vary, and sometimes can take up to one year to begin receiving payments.