Most personal injury cases are resolved before going to trial because the parties are able to reach a settlement outside of the courtroom. A settlement will require the defendant to compensate the plaintiff for his injuries. The compensation will either be paid all at once, which is known as a lump sum settlement, or in small payments over a specific period of time, which is known as a structured settlement. Which one of these types of settlements is better? Here’s what you should know about lump sum vs. structured settlements in personal injury cases:
Easier to Pay Bills With A Lump Sum Settlement
One of the reasons why personal injury victims are often so eager to settle is because they have medical bills and other expenses to pay. However, it can be difficult to pay the totality of your bills if you are given a structured settlement. You may need to wait for several payments to come through before you are able to pay off medical bills associated with your injury.
If the defendant would rather pay a structured settlement, ask if they are willing to provide a larger payment upfront so you can cover all of your expenses.
Managing A Lump Sum Payment Can Be Difficult
Receiving a large sum of money all at once can be a lot for one person to handle. You may not know what to do with the money or what type of account to keep it in. Some people may start spending the money even though they know that they should probably save it. If you don’t want to deal with the hassle of managing a large amount of money, it’s best to ask for a structured settlement.
Taxable Income
The compensation that you are awarded for your physical injuries is not taxable, however other types of compensation are. For example, compensation that you are awarded for emotional injuries is taxable as long as there was no physical injury. This is rare, but if you are offered a settlement in case where you only suffered emotional injuries, a structured settlement may be better. This way, you do not receive a lump sum of cash that is considered taxable income.
If you have been injured in an accident that was not your fault, contact Reisch Law Firm today. Our personal injury attorneys will carefully review the details of your case to determine if you should move forward with a claim. Schedule a free consultation today by calling 303-291-0555 or filling out this online form.
