If you file a claim after getting into an auto accident and your prevail in the litigation, you could be faced with a decision: whether to accept a lump sum or agree to a structured settlement paid out over time. Which is preferable?
Both choices carry certain tax and other financial implications, so the decision should never be made on the fly without first running the matter by a tax attorney and/or your financial services professional. But tax implications aside, what are the advantages for choosing the structured settlement?
One potential advantage in a structured settlement is for cases of catastrophic injuries to the brain or spine where present medical treatments are limited. While no one has a crystal ball, researchers are actively seeking ways to regenerate spinal nerves that could make walking once more possible at some future point. Funds can be designated for future medical treatments that do not yet exist in case this comes to fruition.
A second potential advantage for some plaintiffs may be that this is a guaranteed income stream for life (or a set period of years). Not everyone is able to handle sudden wealth without dissipating the funds on rash purchases.
Of course, there are always negative consequences, including unforeseen economic conditions stemming from recessions, depressions or even simply inflation that could adversely affect the size of the annuities.
Which option will be the best choice for you takes into account many different factors, including:
- Whether or not you have dependents (and their ages)
- Your own age and stage in life
- Your temperament
- Physical repercussions of your accident
- Future plans
If you are offered a structured settlement in your personal injury case, make sure you discuss your options with your Brooklyn attorney and some financial professionals before deciding.