If you have been injured in an accident that was not your fault or have been the victim of shoddy manufacturing quality, you may be entitled to repayment for your pain, suffering and injury. The court will evaluate your case, listen to both sides and then make an award judgment. In some cases, this can be a very significant amount of money. However, if you’re thinking about receiving that money all at one time, it might be best to rethink things. Chances are good the court isn’t going to award a lump sum. Why do courts avoid lump sum settlements?
The Question of Amount
In many instances, courts avoid lump sum settlements because of the amount of the settlement and the detrimental effect it would have on the defendant’s situation if it were awarded all at one time. To avoid completely ruining a company, courts will usually award a structured settlement, allowing the company to pay out slowly, over a long period of time.
The Question of Taxes
Sometimes, accepting a lump sum payment isn’t a good idea for you, particularly when there’s a heavy tax burden to bear. In some cases, you won’t have to pay taxes on a lump sum settlement, but that’s not always the situation and you’ll need to speak with your attorney to determine if accepting an offered lump sum settlement makes sense for you.
Benefits of a Structured Settlement
While getting your money upfront might seem like a good thing (and sometimes it’s necessary), there are some benefits to courts that avoid lump sum settlements. Many awardees find that they spend all of their settlement very quickly, leaving them nothing to live on afterward. A structured settlement avoids this completely.
A Way Out
Even if the court decides that your settlement should be in regular payments rather than as a lump sum, there is a light at the end of the tunnel. There are companies out there that will buy your structured settlement agreement in exchange for a lump sum of cash (less a certain percentage). It’s best to approach this situation with a trusted broker who understands the industry and will help you get the best deal possible for your structured payments. Going it alone here is not advisable, but with the right help from an expert, experienced brokerage, you can have the financial footing that you deserve.