Personal injury accidents can be life changing. After dealing with the physical and emotional aspects of your injury, you still have a long road ahead when it comes to settling your claim.
Whether it has resolved in settlement or receiving judgment from a trial, you may have to wait a period of time before receiving your benefits. While it can be very difficult to cope with your life during this time, sometimes receiving the settlement can raise even more questions.
When it comes to receiving compensation, you have the choice to receive a lump sum payout or a structured settlement. It’s important to carefully considering these options. In some cases, receiving a large sum of money and trying to move forward with everyday life can be overwhelming.
Lump Sum vs. Structured Settlement
You probably have had this conversation with your personal injury lawyer, but there are two major options for receiving a settlement from a personal injury claim: a lump sum and structured settlement.
Structured settlement – provides you with greater flexibility and frequently come in the form of an annuity, meaning that you may be able to receive the funds tax free. One of the biggest downsides to the structured settlement is that there is no way to change it after it’s finalized. It can be difficult to move on with life if you have large fees that you need to pay, but are limited by the terms of the structured settlement.
Lump sum settlement – can be equally difficult to navigate. You need to be able to properly plan ahead for the future, especially in terms of your medical care.
One of the most important things you can do for yourself is to make an informed decision well in advance about whether it’s in your best interest to receive a lump sum payment or a structured settlement, and consult with an experienced personal injury lawyer.
Which One Should I Choose?
Some people prefer receiving the smaller settlements over a long period of time so that they have income to rely on. Part of this is because many individuals are already comfortable with receiving a paycheck on a weekly or bi-weekly basis. Sometimes individuals with significant medical expenses may prefer a lump sum payment.
If you choose to accept a lump sum settlement, then it may be a good idea to speak with a financial advisor. Many individuals struggle with inheriting or receiving a lump sum of money when they have never done so before. It can be difficult to properly budget and plan ahead for the future.
You do not want to be in the position of having spent all the money within a year or two and then not having the funds necessary to support your medical care and other needs—especially if you receive a relatively large lump sum settlement in the form of six or seven figures.
You need to plan ahead about how to properly invest this for your future and what you could take out as monthly expenses or yearly expenses for your own care. It’s worth doing the work upfront to complete your budgeting goals for a successful future.
Choose a Financial Advisor
A financial advisor who is well-versed in helping clients with these large sums of money can be very valuable during this time. This is so you can make an informed decision about your future, and put in place essential plans that will continue to support you for years to come.
Receiving a lump sum settlement can feel like a big sigh of relief, but if you do not plan appropriately, then you could be compromising your own recovery. You need to think about the long term, hence why meeting with a financial advisor with experience in this field can be critically helpful.
Choose a Personal Injury Lawyer
Having a discussion with your personal injury lawyer about how you’d like to receive your settlement should happen prior to receiving it. Your personal injury lawyer will also take the time to discuss the advantages and disadvantages to receiving a large payout versus a structured settlement, and even advise you to which would be the most beneficial to you in your situation.
About Author:
Scott J. Sternberg at Scott J. Sternberg & Associates, P.A. help his clients recover the compensation they need to pay for medical bills, lost wages, costs associated with disabilities, any future costs as a result of their injuries, and much more. In the event that someone else’s negligence has contributed to the cause of the accident, a victim should consider contacting Sternberg at Scott J. Sternberg & Associates, P.A. to discuss their options. From the beginning of your case to the end, Sternberg will stand by your side, fight for your rights and help return a sense of normalcy and stability to your life.