Structured Settlements
When you have been seriously injured in an accident that was someone else’s fault and have been awarded a significant amount of money for damages, there are two main ways that you can receive your settlement: one lump sum payment or a structured settlement.
A structured settlement is a way to receive your settlement in periodic lump sums or installments over time. Money received in a structured settlement may have certain tax advantages and offer long-term financial security to those who do not have experience managing large amounts of money.
Structured settlements are typically set up through annuities that can be structured to pay you in accordance with your anticipated needs. Annuities typically end when a person dies, so it is a good idea to set up an annuity that is stipulated to pay a minimum number of payments or pay into your estate upon your death. Also, the terms of an annuity are difficult to change once they are in place, so make sure that you understand—and are in agreement with—the terms and conditions of your structured settlement.
Some people who initially agree to a structured settlement later change their mind. While you may sell your structured settlement for cash in some states, it is generally not a wise decision. There are unscrupulous companies that may take your money and run or declare bankruptcy before you receive your money—leaving you with nothing. Additionally, people who sell their annuity typically lose half the value of their structured settlement. It is best to know what you are getting into before agreeing to a structured settlement.
Although structured settlements are a common method for dispersing money obtained in a personal injury lawsuit, it is not the best option for everyone. You must have an understanding of who you are and honestly evaluate how good you are at managing your money. Sadly, people who are not good money managers have been known to blow through lump sum settlements and are left with nothing to help them with the financial burden of their injury over time.
Be sure to carefully assess your situation and discuss the pros and cons of a structured settlement with an experienced attorney before you decide the best method for receiving your settlement.
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