Those entitled to damages in a personal injury claim may have options in how they want to receive the monies. One is a lump sum settlement (they receive the entire settlement at one time) and the other is a structured settlement (the award is disbursed through periodic payments).

Many people find there to be greater advantages when payments are structured, but it’s still important to look at some of the pros and cons to receiving these structured settlement payments.

Pros of a Structured Settlement

Tax benefits. Unlike a lump sum settlement which can be taxed many times, a structured settlement is invested into an annuity so the payments aren’t taxed. However, this typically requires someone else to be in control of the funds.

Preservation of funds. Studies have proven that lump sum payments are often spent quickly and more often on non-essentials. But with a structured settlement, the monies are preserved according to the person’s needs. For instance, if you know medical treatment will be necessary in the future, you could parse out the funds so that future needs are met.

Set up to meet unique needs. The structuring of the payments can be set up in such a way as to meet your unique needs. Let’s say you want to set aside some of the money for later on in case new treatments are developed for a particular condition. Or you suffered a catastrophic injury and want to ensure monies are available over a lifetime. A structured settlement allows you to do this.

Cons of a Structured Settlement

Payment structuring cannot be changed. There can be unforeseen circumstances that occur where some personal injury claimants suddenly need the money. But it cannot be borrowed against a structured settlement. Or it could be that inflation increases and the payments are no longer enough. Once the plan has been set up, it usually can’t be changed.  

Return may not be significant. Sometimes the return isn’t as substantial as it would be when investing a lump sum.

Talk to an attorney about each type of settlement agreement and which may be best given your particular situation. You may even consult financial advisers and experts. To set up an appointment with attorney Jason R. Schultz in Peachtree City, call 404-474-0804.

Jason R. Schultz
Helping Georgia area residents with car accident, medical malpractice, and personal injury claims since 1991.
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