For many personal injury claimants or plaintiffs, the idea of getting a larger sum of money at one time sounds most appealing. But it’s important to carefully consider the pros and cons of a lump sum settlement.
Pros of a Lump Sum Settlement
Can immediately access the funds. If you have an immediate financial need, such as to pay off bills, the money is available. Or if it’s necessary to make a career change because an accident prevents a return to the old job, the money is there to help set up a new business venture.
Another issue that could make a lump sum advantageous is when someone has been critically injured and must purchase expensive medical equipment.
Option to invest. There is also the option to invest the lump sum settlement. In some cases, it could result in a significant long-term return. Or it could allow for income to be received on a regular basis.
Cons of a Lump Sum Settlement
May spend money too quickly. It takes self-discipline to manage money wisely, but especially when suddenly in possession of a large amount. Despite good intentions, it could be easy for some people to spend it frivolously. Another issue is that the money could be spent on others who have unnecessary expectations for receiving financial help.
Tax disadvantages. There could be a significant tax burden with a lump sum settlement. This may depend on whether or not a portion of the award is considered income, which is taxable.
Each type of settlement agreements for a personal injury claim can have both advantages and disadvantages. It’s important to look at all aspects and talk with an attorney to learn which option is the best fit for your circumstances. Set up your consultation with Jason R. Schultz in Peachtree City today – 404-474-0804.