Why It’s Better to Chose Structured Settlement Payment

If you’re either the plaintiff in a lawsuit who gets awarded damages or the defendant who would have to shell out compensation in a settlement, a structured settlement payment is an arrangement you should consider.

A structured settlement payment or what more people know as “periodic payments” is another option for compensation in a personal injury claim aside from paying in lump sum. While getting $5 million worth of damages would sound cool and may seem like a lot of money, some victims end up blowing through the entire amount within a few years, either through mismanagement or poor finances.

A structured settlement however, will give both the plaintiff and the defendant the option to break down the amount into installment payments. Over the years, this is often paid through annuities from an insurance company.

The terms of payment for a structured settlement may vary depending on the agreement of the parties. It can be paid as annual installments or in periodic lump sum every other year.

Here are some of the advantages of opting for a structured settlement payment:

• Tax Avoidance. A structured settlement can be set up to lower or even possibly eliminate tax liability.
• It can be organized depending on the needs of the client. Through structured settlement, the awarded amount can be divided, a large portion may be allocated for the payment of immediate expenses and debts and the rest can be paid in staggered amounts over the years.
• Receipt of monetary compensation can be structured for varying lengths of years.
• Plaintiffs who suffered from an injury which is expected to last long-term or for permanent disabilities will benefit from receiving continuous payment or periodic lump sums.

But while there are many benefits in a structured settlement payment, there are also disadvantages. Some of which include the fact that some people may need a bigger amount that what they would usually get, especially in emergency situations. Also, bear in mind that once the structure has been determined, it becomes fixed. You cannot get more or advance your payment or borrow against it.

So when considering what mode of payment would best suit your condition and current finances, hiring a lawyer to guide you through talking to the opposing party and insurance companies would be a huge advantage. He can advice you on what kind of payment would benefit your injury or disability in the long run so that you will be able to fully enjoy the benefits of your award or compensation.