How to Choose a Structured Settlement

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It is reported that the average personal injury settlement in America today is $52,900. 

Where settlements are above average, however, a court may decide that a single lump-sum payment is inappropriate. In this case, they might decide to award a structured settlement instead. 

Read on as we look at the key features of structured settlements, and what you should consider when deciding on what you want from your structured settlement. 

Factors You Should Consider When Negotiating Your Structured Settlement 

While structured settlements are court-ordered, you are the beneficiary and are therefore entitled to negotiate most elements of the settlement. 

For instance, you can state your preferences in relation to the length of the payment plan, the frequency of payment, and whether you would like to end the arrangement with a lump sum. 

The following factors are the most important when making these decisions. 

Your Needs 

Your foremost consideration when deciding on a payment structure should be your financial needs. 

If you are young, you don’t own a property or have dependent children, and generally have no pressing need of large amounts of money, it is probably a good idea to look for your settlement in small amounts over a long period. 

On the other hand, you might have considerable debts to pay arising from your injury or expenses that you cannot meet as a result of it. In this case, you should look for a large percentage of your settlement upfront. 

You may also decide to invest a portion of your settlement. Again, this may require you to seek a large amount of it upfront. 

If you are in need of a large sum of money for one reason or another, you should be aware that it is possible to sell structured settlement plans for cash. 

Your Money Management Skills 

One of the main advantages of a structured settlement is that it prevents beneficiaries from spending all of their settlement too quickly. 

If you have experience with saving money and making fiscally responsible decisions, this may not be an issue for you. 

However, if you don’t need a large amount of money for any reason, it may be better to opt for a more gradual payment structure. Everyone is susceptible to temptation! 

Tax Implications 

While lump-sum payments themselves will not be taxed, the proceeds of any investment you make with them will be taxed at both the federal and state level. 

However, the annuities used for structured settlements are exempt from tax. A structured settlement is therefore likely to result in more money in your pocket than a lump sum. 

Structured Settlements: Get The Best Deal  

There are a number of advantages to structured settlements. However, you have options when deciding on your payment plan. You should consider these carefully to ensure that your claim does as much for you as it possibly can. 

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