In 2019, the structured settlement industry production hit a record exceeding $6.4B. Structured settlements are relevant tools for personal injury settlements.
If you are involved in a personal injury case, you may be wondering what a structured settlement is. Read on to learn everything you need to know about structured settlements.
What Is a Structured Settlement?
Victims of personal injuries who win or settle their case choose to take their winnings as a series of payments over time rather than a lump sum. The series of payments are known as structured settlements.
How Do Structured Settlements Work?
If you take your award as a structured settlement, you’ll receive periodic payments over a certain number of years. You’ll be able to design your structured settlement payments to receive money when you need it most.
One of the many benefits of structured settlements is that you can choose between a few options, such as:
Large Initial Payment
If you’ve been unemployed because of your injury or your bills are adding up, you can design a structured settlement to provide you with a large initial payment.
This large payment is best used for paying off a mortgage, paying overdue bills, or purchasing necessary items like a car. After receiving a large initial payment, you’ll begin seeing smaller periodic payments.
Additional Amounts
Additional amounts are given along with yearly income from a structured settlement. These additional amounts can help with extraordinary expenses like college funding.
Increased/Decreased Payments Over Time
You can design a structured settlement to start low and end with higher amounts. This means, over the years, payments will step up.
You can also receive structured settlement payments the opposite way. The payments will start high and end low over the years. This is a smart settlement funding option for those that expect their income to increase down the line.
Delayed Payments
You can delay your structured settlement payments and start receiving them later on. Some plaintiffs choose to delay their awards until they retire.
Structured Settlement vs. Lump Sum
If you are unsure if structured settlements are right for you, you should always speak to a financial expert at Rightway Funding. You can learn more about Rightway Funding now.
Deciding between these payments and a one-time lump sum depends on tax obligations, what you need the money for, and if you have the skills to manage a large award.
Tax Obligation
Your tax obligations will depend on what you are using your funds for. A lump-sum payment comes with a lot of complicated laws that may require a lawyer to understand.
Managing a Large Reward
Managing a large sum of money is risky for those who don’t often save. If you are likely to blow your lump sum, it is best to opt for structured settlement payments instead.
Hiring an Attorney
Before taking structured settlements, you should hire an attorney to go over the terms with you. An attorney can ensure the structured settlement is designed to benefit you and your needs.
After receiving your periodic payments, it is best to work with a financial specialist you trust to receive them. Even if you opt for a lump sum instead, consulting a financial expert can be beneficial.
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