A structured settlement is one that is distributed to the plaintiff in installments as opposed to a settlement sent in one payment. Structured settlements can be beneficial in some situations, even though lump sum settlements are preferred by most plaintiffs.

You may have heard this term in the past, but we will explain it further in the article below, as well as lay out the benefits of receiving a structured settlement over lump sum settlements, and vice versa.

It’s important to understand structured settlements to help you make an informed decision about your personal injury claim. But, it’s important to remember that consulting with an experienced personal injury attorney before making any decision in your case is recommended.

Brandon J. Broderick, Attorney at Law has worked with clients in personal injury cases for decades. We can help you get the compensation you deserve.

Benefits of a Lump Sum Settlement

Lump sum settlements are common in personal injury cases. In these types of settlements, the plaintiff receives the entire settlement amount in one payment. This method is the most common in small to mid-sized cases.

Advantages of Lump Sum Settlements:

• Immediate Financial Relief: Receiving all the money upfront allows plaintiffs to pay off any medical bills and debts incurred due to their injuries.
• Financial Flexibility: With a lump sum, plaintiffs have the freedom to invest or spend the money as they see fit.
• Case Closure: Lump sum settlements bring a sense of closure, allowing plaintiffs to move on with their lives without further financial negotiations.

Advantages of a Structured Settlement

In certain situations, structured settlements can be more beneficial, especially for plaintiffs with significant long-term financial needs.

Key Benefits of Structured Settlements

• Financial Security: Structured settlements prevent the rapid depletion of funds by distributing payments over a period of time. This ensures ongoing financial support for future or ongoing medical expenses and living costs.
• Tax Advantages: While personal injury settlements are generally tax-exempt, investing a lump sum can lead to taxable income. Structured settlements can reduce tax liabilities as payments are used directly for expenses.

How Structured Settlements Work

When opting for a structured settlement, the plaintiff and defendant typically work with a life insurance or financial company specializing in annuities and long-term financial planning. You should choose a reputable company to ensure stability and reliability over the settlement period.

Negotiable Terms of a Structured Settlement:

• Timeline: The duration over which the payments will be made.
• Payment Frequency: How often the payments will be distributed (e.g., monthly, annually).
• Payment Amount: The specific amount to be paid in each installment.
• Beneficiaries: Designating who will receive payments in the event of the plaintiff's death.

Calculating the Value of a Structured Settlement

Structured settlements provide a steady income stream, but it's important to note that the total amount paid over time may be less than the nominal value due to the absence of interest on the principal amount. For example, receiving $1 million over 20 years in structured payments may have a lower present value compared to a lump sum with accrued interest.

Consult with a Personal Injury Attorney

To ensure you receive a fair settlement that aligns with your best interests, consulting with an experienced personal injury attorney is very important. At Brandon J. Broderick, Attorney at Law, we have a team of attorneys with experience in personal injury cases of all types. We can help you understand whether a structured settlement or a lump sum is the best option for your case.

Contact us today to schedule a consultation with a skilled personal injury attorney from our team.