If you have become disabled or partially disabled over an accident and are going to receive significant compensation in a personal injury case, a structured settlement could provide some protection and advantages for you over a lump-sum payout. There are five reasons you will want to consider it.
1. The Willingness To Accept One Could Speed Up The Settlement Process.
If there is large disparity between what your needs and what the defendant will pay or can afford to pay, agreeing to a structured settlement may make a satisfactory settlement possible.
2. They Can Be Tailored To Your Needs
You can arrange to have your settlement come in a variety of ways. For instance, you could agree on an initial payment to help with your current expenses and then accept the remainder in payments that could be used for future medical bills and living expenses.
You may keep in mind that there could be advances in treatment that would provide a cure for your disability and you will want to set aside some of the cash to be able to afford it. You may even want to forego payment now, and arrange for payments to begin at your retirement age.
3. You May Need to Retain Eligibility for Government Assistance
You will want to be realistic about your situation because without certain government programs, your settlement could disappear quickly and you would fall short of paying all your medical and living expenses. However, a receiving lump-sum payout could make you ineligible for Medicaid or SSI (Supplemental Security Income).
To avoid this issue, your attorney may recommend setting up a irrevocable trust that would be funded by the structured settlement payments, and the payments could designated for needs that wouldn't interfere with the government programs.
4. It Can Serve as a Protection From Self and Others
Unfortunately, when certain friends or relatives see that you have come into a large sum of money, they may not have your best interests at heart. You might be besieged with requests for loans and outright handouts, or you could also be encouraged to invest in foolhardy ventures. You might also be tempted to make impulse purchases that you would regret. A structured settlement would make it easier for you to protect your interests.
5. You May Receive Tax Benefits
If your settlement is primarily for physical injuries, it may be exempt from taxes. However, if you want to put this money into investments, the earnings you make would be taxable.
In a structured settlement, you are not considered the owner of the annuity but the recipient. The defendant's insurance company will sell the annuity to a subsidiary assignment company which will in turn disburse payments to you. Therefore you would not have to pay taxes on the money you receive.
To recap, a structured settlement may be advantageous to you by shielding you from the depredations of others, allow you take advantage of government programs to ensure you are not eventually impoverished, and may provide tax benefits. To receive legal advice and make sure a structured settlement is your best option, you will need to consult a personal injury attorney. To learn more, contact a law firm like Scherline And Associates.