The Pros and Cons of Structured Settlements
Let’s say that you have a case, where your damages could be very significant. You probably think that if you win or settle your case, getting all of your compensation at one time is the only option. But that’s not always how it works. Through what are known as structured settlements, there are other options.
What Are Structured Settlements?
Structured settlements are investment vehicles that you can use to pay your settlement money out to you over an extended period. Your first question may naturally be why you would want anything like that, instead of just getting the entirety of your verdict or settlement all at once.
Although structured settlements aren’t right for everybody, they do have benefits that you should consider.
More Money Over Longer Time
One benefit is a larger overall settlement.
The Defendant or insurance company does not have to pay you everything at once; they can pay less, put it into an investment (usually an annuity, which is safe and generally isn’t affected much by economic downturns), and you will receive more overall.
The extra money you receive is coming from interest or whatever return on whatever investment vehicle that you use. That means that the Defendant is willing to settle for more because they are not out of pocket the entirety of the dollar figure all at one time.
Although most personal injury settlements are not taxable, there could be tax benefits in some cases, to using an annuity.
Drawbacks to Structured Settlements
As you may have guessed, structured settlements are not for everyone.
Based on your financial situation and needs, you may not have the option of being paid out funds over an extended time. For people who need funds now, or who may be older, and want to be able to access and use their funds, a structured settlement may not be the best option.
But for others, who may be younger, or have other means of income, the structured settlement can be a good option. And anybody can leave the proceeds to a structured settlement to family or beneficiaries, in an estate plan or will, so you don’t “lose your money” should you pass away before the entirety of the settlement is paid out.
If you fall on hard times, and need access to the entirety of the compensation, many companies will “buy out” your settlement, so you can access your funds all at once, although they will buy your structured settlement for much less than what it is worth.
Structured settlements can be complex financial vehicles, so when there is the possibility of using one, your personal injury attorney will usually get a financial advisor or manager on board to help you.
Do you have a catastrophic damage case? Contact the Las Vegas personal injury lawyers at Cameron Law today for a free consultation to see how to help you with your claim or lawsuit.
