At Griggs Injury Law, we have helped many Kansas and Missouri residents obtain compensation for their injuries, including spinal cord injuries. Many personal injury lawsuits end in a settlement agreement. Both parties agree to a settlement to avoid taking the case to trial. In exchange for receiving a settlement payment, the injured party agrees to refrain from suing the defendant in court. When it comes to personal injury lawsuits, there following are the main types of settlement payments — lump-sum payments, structured settlement payments and a hybrid of the lump-sum and structured settlement payments.
Lump-Sum Payments vs. Structured Settlement Payments
In a lump-sum payment, the victim receives the entire amount of compensation in one lump sum. For example, if the parties agreed that the plaintiff would receive a $1 million settlement, the plaintiff would receive his or her share of the entire million dollars in one lump sum.
In a structured settlement agreement, the plaintiff will receive guarantee multiple payments over a period of years. The settlement agreement should spell out exactly when each payment will be delivered and in what amount. There are advantages and disadvantages to both types of settlement payments, and it is important that you discuss your options with your attorney.
Or, plaintiffs may choose to accept some of the settlement money in a lump sum and invest the remaining amount in a structured settlement. This hybrid approach works well for many as it gives them both flexibility in managing their money and a guaranteed, tax-free payout of a structured settlement.
How Does a Structured Settlement Work?
If you agree to a structured settlement, it is important that you understand how it works. The settlement fund will typically go to a third-party insurance company that will manage the settlement. The defendant will calculate how much they must pay in each payment to fund the settlement entirely. It is essential that your personal injury lawyer carefully reviews the settlement agreement before you sign it to ensure you are receiving the correct amounts.
Often, a company that provides a structured settlement will give you a great deal of flexibility in determining how much to invest, how often to get paid and how much you will get paid each payout period.
When considering a structured settlement agreement, you should consider all of the following factors:
- The frequency of payments
- The amount of payments
- How long you want to keep receiving payments. Do you want to receive payments over months or years?
- Will you receive larger payments upfront and then smaller incremental payments over time?
- Will the payment amounts decrease or increase over time?
- Will the payments stop after your death or do your loved ones inherit your settlement giving them access to the payments over time?
Should You Accept a Structured Settlement?
Deciding whether to accept a structured settlement can be overwhelming. Some positives and negatives come with accepting a structured settlement. On the positive side, you will not risk spending all of the money too quickly, and you may enjoy tax benefits. You will also be assured that you will receive tax free income in the future and you won’t feel pressure from your relatives to give them money because you will not have the entire sum at once. On the other hand, you may not be able to pay your outstanding bills right away, and you will not be able to control the money yourself to invest it.
Contact an Injury Lawyer
If you have been injured in an accident that caused a spinal cord injury, Griggs Injury Law is here to help. Contact us today to schedule your free initial consultation.