The Pros & Cons Of A Structured Settlement

The Pros & Cons Of A Structured Settlement

Posted by Joe Lowman on Fri, Oct 12, 2012

Depending on several factors, you may opt for a structured settlement. An injury attorney can help you decide what?s in your best interest when it comes to choosing what type of settlement you choose if you win your case. But what are structured settlements exactly?

What Is A Structured Settlement?

There are times when a plaintiff opts to settle a case for a large sum of money, the defendant, the plaintiff's injury attorney, or a financial planner consulted in association with the settlement, will propose paying the settlement in allotted installments over time rather than in a single lump sum. When a settlement is paid in this way it is called a "structured settlement". In many cases, the structured settlement will be created through the purchase of one or more annuities, which works as a sort of guarantee.?

There are various ways you can receive your payments. For example, the settlement may be paid in annual installments over a number of years, or it may be paid in periodic lump sums every few years. Your personal injury lawyer will work with your financial advisor to determine the most beneficial settlement schedule for you.

The Benefits Of A Structured Settlement

• Tax Avoidance ? When properly constructed, a structured settlement may reduce your tax obligations as a result of the settlement, and may in some cases be tax-free. Of course, to what degree will depend on your unique circumstances. Your accountant can explain the process and what suits your best interest.

• Insure That You Will Be Able To Cover Future Expenses ? Sometimes there?s a temptation to spend your settlement quickly, leaving you unable to cover the necessary future expenses of your injury. A victim who has long-term special needs may benefit from having periodic lump sums with which to purchase medical equipment or modified vehicles.

• Special Needs Trust ? For the severely disabled, your injury attorney may recommend that the victim (you or a loved one) set up a special needs trust. In addition to valuable advice from your injury attorney, a disabilities financial planner can help those in need decide if this option is right for you.

Possible Disadvantages Of The Structured Settlement

• Financial Need ? Many victims who win their cases with the help of an insightful attorney might well need every bit of that settlement right away. If this is the case, it might be advantageous to accept a lump sum payment. However, a lump sum decision might result in a lower award. Your attorney will explain if this is the case with you.

• Good Investment - Some people will do better by accepting a lump sum settlement, and investing it themselves. Many standard investments will give a greater long-term return than the annuities used in structured settlements.

Structured settlements can be complex. Hiring a well-qualified, experienced injury attorney can not only help you potentially win your case, but they can also advise you about your best options for settlement. You can rely on the wise counsel of the personal injury attorneys at Lowman Law Firm for sound advice.?Call Lowman Law Firm at 1-866-9-LOWMAN for a free consultation!

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Source: http://www.lowmanlawfirm.com/blog/bid/87469/The-Pros-Cons-Of-A-Structured-Settlement

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