Often in personal injury compensation suits, the settlement amount is paid out to the plaintiff in instalments over period of time instead of a lump sum. This system of payout is known as structured settlement. Assuming that the settlement is large enough to allow several instalments spread over a long period of time, opting for a structured settlement as opposed to a lump sum payment has its own benefits.
While the money that comes in through a structured settlement is exempt from taxes, in case of a lump sum payout, it is mandatory that the amount be invested and managed. All returns on this invested capital are taxable.
Security is another important benefit of opting for a structured settlement. Structured settlement for a personal injury is a safe and assured way to obtain the entire settlement amount. Small payouts at regular intervals obviate the hazards of being in possession of large amounts of money. This is a low risk situation and is also likely to prevent overspending.
Small payouts spread over time also provide a regular and steady flow of money. In cases where the victim is incapacitated and not able to work, structured settlement will offer a regular inflow of cash that can serve as a steady income for the victim and their family. Sometimes the nature of the personal injury warrants extensive health care over a long period of time. A structured settlement assures that these expenses are taken care of. In some cases, it is also possible to adjust payouts according to the changing nature of the victim’s health care plan.
Settling for a lump sum payout does have its share of benefits. It puts the injured party in full control of their settlement amount and they’re free to use and invest it wisely. This can be a good option when one is need of hard capital for fulfilling other more pressing financial demands. However, in certain cases of personal injury, it is particularly beneficial to opt for a structured settlement:
-In some cases the victim requires extensive ongoing treatment and health care. In such cases structured settlement is the best option.
-In the case of compensation for workers who have suffered severe injury and cannot continue to work, a structured settlement provides a regular and alternative income for the victim and their family.
-In case of the victim’s death, a structured settlement ensures future financial security of surviving family members, including minors.
There are several possibilities and options. It is best to review your own unique situation and make an informed choice. Should one find themselves in the position of a plaintiff in a personal injury suit, it is important to consult a personal injury attorney and learn as much as possible about different options and possibilities as well as their respective pros and cons.