Does Your Personal Injury Award Need A Structured Settlement?July 25, 2022
If you’ve ever turned on the television there’s a good chance that you’ve heard a jingle or two about “structured settlements.” However, the average person who has never been involved in a personal injury lawsuit may not even know what a structured settlement is or how they are used.
What Is a Structured Settlement?
When a plaintiff wins or settles a personal injury case, he or she often receives a significant amount of money. A structured settlement is a way to divide a large settlement (typically any settlement of $100,000 or more) into a series of payments over a longer time span. This is often useful for individuals who want to ensure their settlement money is handled responsibly and will last throughout the duration of time they need financial assistance.
Can A Structured Settlement Be Customized To My Needs?
Structured settlements are highly customizable and can be designed to meet the unique needs of each individual plaintiff. For example, structured settlements can be paid out in a one-time large lump sum, with smaller weekly, monthly or annual payments paid out over the course of a range of time from a small number of years or through the duration of a person’s lifespan. Many individuals opt to structure a settlement to begin paying out upon retirement to help ensure long-term financial stability. Parents can structure settlements in such a way that their children can receive a special lump sum allocated for college and other extraordinary expenses. Structured settlements can also increase or decrease a payout amount over time, depending on the need. However, once structured settlement terms have been reached, they cannot be altered. Because the terms cannot be changed one must be very careful before entering into a structured settlement agreement.
Will This Affect My Tax Liability?
Tax advantages are one of the best benefits of a structured settlement. If the underlying compensation for an injury is not taxable, neither is the additional income derived from the investment income on the hose funds. On unstructured, lump sum payments, any investment income derived from the settlement is most likely taxed to the settling party. In most injury cases your attorney should be able to resolve the case with minimal or no tax liability to the client.
Bottom Line: Is A Structured Settlement Right For You?
The choice to utilize a structured settlement is personal and something you should begin discussing with your attorney early in the process. Structured settlements can be a source of peace of mind for individuals who do not have the resources or know-how to effectively manage large amounts of money from a settlement or award. They can provide long-term stability and can have the added benefit of helping plaintiffs avoid risky spending and guilt-fueled handouts to family and friends.
Regardless, it is always important to know your options and discuss them with an attorney or a financial advisor. For more information about structured settlements or for a free consultation, contact Lowe Scott Fisher at 216-781-2600 or submit your information online. We offer free case consultations and contingency based fee agreements (we don’t charge a fee unless you receive a financial award.)Back To Blog