Choosing the Right Settlement Option in Vermont Personal Injury Cases

If you have suffered an injury due to another party’s negligence in Vermont, you may be entitled to compensation. Many personal injury cases are settled outside of court, and when this happens, the injured party is often given two primary options for receiving their compensation: a lump sum or a structured settlement. Understanding the differences between these two options is key to making the right financial decision for your future.

A lump sum settlement provides the total amount of compensation at once, while a structured settlement distributes payments over a set period. Both options have advantages and drawbacks depending on your financial needs, long-term stability, and ability to manage money effectively. We explore these settlement choices, how Vermont law applies to them, and which might be the best option for your situation.

As always, we recommend you consult with a VT personal injury lawyer before making any choices in your case.

What Is a Lump Sum Settlement?

A lump sum settlement is a single, upfront payment that resolves a personal injury claim. This option can be beneficial for those who need immediate financial relief, whether to cover medical expenses, legal fees, or daily living costs.

Pros of Lump Sum Settlements

• Immediate Availability of Funds: This option ensures you have full access to your compensation right away.
• Financial Flexibility: You have control over how to use or invest the money.
• Potential Investment Opportunities: A properly managed lump sum can grow over time through investments.

Cons of Lump Sum Settlements

• Risk of Mismanagement: Some recipients may spend the money too quickly, leading to financial difficulties.
• Possible Tax Considerations: Certain portions of a settlement, such as punitive damages, may be taxable.
• Lack of Ongoing Support: Once the lump sum is spent, there are no further payments available.

What Is a Structured Settlement?

A structured settlement is paid out over time, typically in monthly, quarterly, or annual installments. This type of settlement can be customized based on the recipient’s needs and financial obligations.

Pros of Structured Settlements

• Long-Term Financial Security: Regular payments provide ongoing financial support.
• Prevention of Overspending: Payments are spread out, reducing the risk of depleting funds too quickly.
• Tax Benefits: Structured settlements may have advantages when it comes to tax liability, depending on how they are structured.

Cons of Structured Settlements

• Limited Immediate Funds: If you need a large sum for medical bills or other expenses, a structured settlement may not provide enough upfront.
• Less Financial Control: Payments are fixed, limiting your ability to make major investments or financial moves.
• Dependence on Annuity Providers: Your payments are reliant on the financial stability of the provider managing the structured settlement.

Legal Considerations for Settlements in Vermont

Vermont law outlines specific guidelines and requirements for personal injury settlements, ensuring that they are handled fairly and that the injured party receives adequate compensation.

Vermont’s Comparative Negligence Rule

Vermont follows a modified comparative negligence system (12 V.S.A. § 1036). This means that if you are partially at fault for the accident, your compensation will be reduced by your percentage of fault. However, if you are found to be more than 50% responsible, you are not eligible to recover damages.

Court Approval for Certain Settlements

In cases involving minors or individuals requiring long-term care, Vermont courts may need to approve structured settlements to ensure they serve the injured party’s best interests. This is particularly relevant when ongoing medical expenses are expected.

Tax Implications of Personal Injury Settlements

While most personal injury settlements are tax-free under federal and Vermont state law, some portions, such as punitive damages or interest on settlements, may be taxable. Consulting a financial advisor or attorney can help clarify any tax obligations related to your settlement.

Which Settlement Option Is Best for You?

Choosing between a lump sum and a structured settlement depends on several personal factors, including:

• Current Financial Needs: Do you have large immediate expenses such as medical bills or legal fees?
• Long-Term Financial Goals: Would you prefer a steady income stream over time rather than receiving a single payment?
• Investment Knowledge and Spending Habits: Are you confident in managing a lump sum wisely, or would structured payments help ensure financial stability?
• Future Medical and Living Expenses: If ongoing medical care is necessary, a structured settlement may be more beneficial.

Ultimately, the right choice varies from person to person. Seeking guidance from a personal injury attorney and financial planner can help you determine the best course of action.

Call Brandon J. Broderick for Legal Help

Navigating Vermont personal injury claims can be challenging. Fortunately, you don't need to do it alone. The experienced personal injury lawyers at Brandon J. Broderick, Attorney at Law, are available 24/7 to help you understand your legal options, gather necessary evidence, and build a strong case to secure the settlement you deserve.

Contact us now for a free legal review.