Taking Settlements Or Awards: What You Need To KnowLaws
Once you have been reached a settlement or been awarded damages in a jury trial, you now need to collect the money. The two most common options for injured patients and/or their family members to collect the money are either a lump-sum payment or structured payments.
A structured settlement is when the claimant agrees to receive periodic payments on an agreed schedule instead of a lump sum. Oftentimes part of the settlement will be transferred to be structured by a different insurer who specializes in handling structured settlements.
The terms of the structured settlement can be negotiated, including:
- The length of the structured,
- How much money received in each payment,
- How often you receive money,
- Whether there is a lump sum payment at the end of the settlement, and
- Whether the payments end at your death or if the payments continue to your heirs.
There are good reasons to choose a structured settlement over a lump sum payment. The plaintiff will be guaranteed that they won’t be spending the money too fast. There is also savings in taxes on the interest and dividends received on the money after it is invested. This could result in a large tax payment every year while the lump sum payment is sitting in the bank.
In cases that involve birth injury or malpractice to young children, courts will often set up structured settlements or awards. The court will do this to ensure that the child will have money to cover their long-term or permanent medical care.
There are times when a plaintiff will regret that they did not receive a lump-sum payment. The plaintiff may then attempt to sell their structured settlement. However, this may be a mistake because they will be offered much less than what they would have received otherwise.
Lump Sum Payment
Lump sum payments are a less complicated ways to collect the award or settlement money. It also allows for the most options with regard to covering expenses and bills and setting up funds for any future medical care. There could also be reasons why the plaintiff would need the settlement proceeds immediately. Additionally, if the settlement isn’t large, there might not be any significant advantage to a structured settlement.
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