Structured Settlements

by Terry Bryant

When a personal injury case settles, the plaintiff can sometimes choose between a lump-sum settlement and a structured settlement. A lump-sum settlement immediately provides all settlement funds to the plaintiff. A structured settlement distributes the plaintiff’s settlement funds over time.

Although it may be tempting to choose a lump-sum settlement, there may be several benefits to opting for a structured settlement, especially if it is a large amount of money. Most importantly, if you are left permanently disabled from a catastrophic injury, a structured settlement is designed to provide support for the term of the structured settlement. This helps to secure a source of income if you are unable to work and manage expenses for continued medical treatment and care over the course of several years.

There are also tax consequences involved in this choice. Many lump-sum settlements are taxed as income. However, there are ways to design structured settlements to avoid taxation. If you are considering a structured settlement, you should contact your financial adviser to discuss the associated tax consequences.

Other variables that can be negotiated in a structured settlement include the frequency of payments, the amount of payments, and the duration of payments. You can also choose to receive part of your settlement as a lump sum payment, either before or after the structured settlement, to pay for things like medical bills and accident-related expenses.

If you or someone you know has been involved in an accident, contact a board certified personal injury attorney to evaluate your potential claim.