Types of Settlement Agreements for a Personal Injury Claim
Personal injury settlements may involve a lump sum settlement or a structured settlement. The decision as to which one is best depends on your circumstances.
Lump Sum Settlement vs. Structured Settlement
A lump sum is the entire amount awarded in the settlement. So if you agree to settle your personal injury claim for $50,000, you would receive this amount at one time.
With a structured settlement, the damages are distributed periodically, over a specified period of time. It’s invested into what’s called an annuity. While there is a significant amount of flexibility when initially setting up a structured settlement, it typically can’t be changed once it’s established.
It’s usually best to consult a financial adviser or expert about which type of settlement is best for your situation. They will consider not only how to maximize the amount you receive, but the unique needs you should take into consideration.
Important Considerations When Choosing a Settlement Option
Of course, the attorney handling the personal injury case could also offer helpful advice when it comes to the type of personal injury settlement. In fact, he will have played an important role in reaching the agreement in the first place.
Typically, only substantial settlements will warrant weighing the two options. But that means there is likely going to be medical issues that you have to consider; for instance, if you sustained a permanent injury and require funds later on for assistive devices or making modifications to your home. The question might be, “Will I have enough money left over later if I receive a lump sum?” Or, “Should the settlement be structured in a way that deals with those future costs?”
Another consideration would be the length of recovery. It might not make a difference which option you choose if the injury is expected to take a couple of months to heal and recover. But if there is the potential for it to take years, it’s important to think about the potential implications.
The ability to control your spending is another important consideration when choosing a settlement option. Also consider whether family or friends might make it difficult to say no when there is a large amount of money suddenly sitting in your bank account.
Finally, you should also consider the tax implications of each settlement, which is the wisest investment, and your immediate and future needs.
Necessity of an Attorney When Negotiating a Personal Injury Settlement
When you don’t expect the claim to have much value and you’re not seriously injured, you can usually handle negotiations without legal counsel. However, if you suffered serious injury you may benefit from an attorney.
Severity of injuries is measured by several factors including:
- the medical costs;
- anticipated recovery time; and
- the type of injuries.
For instance, injuries that are disabling, reduce quality of life, and/or prevent you from working are serious injuries. Examples include a spinal cord injury or a traumatic brain injury, but even broken bones, organ damage, and other injuries can be serious and require legal help to handle the legal matters and evaluate settlement options.
Injuries that are disfiguring, long-term, or necessitate additional medical care and treatment down the road could also result in a large settlement. The higher the damages and the more severe the injuries, the more substantial a personal injury settlement can be which is why an attorney would be necessary.
Talk to Jason R. Schultz if you suffered serious injuries in the Peachtree City area and wish to pursue a personal injury case. You can also discuss the merits of both lump sum settlement agreements and structured settlements to help you determine which is best for your particular case. Call us at 404-474-0804 or visit our contact page to set up a consultation.