If you’ve been injured in an accident, have taken the responsible party to court and have been awarded compensation you still have an important decision to make. Should you accept the compensation as a lump sum or structured payments? It’s a very important decision and can be a confusing one to make. To help ease in your decision making we have created a short guide on the pros and cons of each option.
Lump Sum Payments
The benefits in accepting a lump sum payment might seem obvious. As soon as your accident claim is closed, you receive a giant payment and you money is immediately available for anything that you might need. You can make improvements to your home to help you cope with a disability, or pay off the debt that has begun to spiral out of control. One major benefit of choosing a lump sum payment is that you don’t have to worry about the value of your settlement being eroded by inflation, as many structured settlements don’t take the rising cost of living into account as well as they should.
However, there are drawbacks to taking a lump sum payment. Much like lottery winners tend to mismanage their sudden good fortune, lump sum payments can quickly vanish too, if one spends wastefully. Controlling your spending and wisely investing a portion of your settlement could put you in a great position, but spending recklessly and living beyond your means could leave you in even worse economic shape than before.
Structured Settlement Payments
A structured settlement offers a variety of benefits to meet a claimant’s goals following a physical injury. Whether you want to retire earlier than planned, need extra money to replace lost earnings due to the injury, or want to have extra income for when your kids go to college, structured settlements can be tailored to meet your specific goals.
It is also possible to have your structured settlement linked to the inflation rate, or at least have the payments increase over time by a set amount. This helps to eliminate the downfalls that can effect structured settlements. There are some limitations, but the principle and interest generated from structured settlement annuities can be tax exempt for plaintiffs who have sustained physical injuries.
Structured settlements are not without their pitfalls, as you could find yourself in a stressful situation if you run into a sudden financial emergency because you don’t have access to all of your money.
There are benefits to both structured and lump sum settlement options but hopefully this has helped increase your understanding of each option.
Contact Seattle Car Accident Lawsuit Attorneys
If a negligent driver injures you or someone you love, an experienced Seattle car accident attorney at Phillips Law Firm can help. If you are interested in learning more about your legal options, call us at 1-800-708-6000. Our Seattle personal injury lawsuit attorneys are waiting to assist you 24/7, offering a free case evaluation. Remember our no fee promise. If we do not recover anything for you, you do not owe us an attorney fee.
The personal injury lawyers at Phillips Law Firm have successfully represented injured individuals and their families in Seattle, Tacoma, Vancouver, Bellevue, Everett, Kent, Auburn, Renton, Federal Way, Bellingham, Marysville, Lakewood, Redmond, Shoreline, and throughout the State of Washington.