Making a decisive choice between a lump sum or a structured settlement can be daunting. After going through the motions of deciding how much money you will receive, you must make the choice to get all of the money up front, or through a structured settlement. There are pros and cons to both ways, and it is important that you look at your specific situation before making any decisions. With a lump sum, you will receive all of the money you won in a case up-front. With a structured settlement, you will decide how much money you will receive at what time (monthly, yearly, etc.). Depending on your unique situation, one choice will be better than the other.
When deciding between a structured settlement and a lump sum, first take a look at how much money you will be receiving. There are many reasons to do this. If you receive the lump sum, you will have to claim it on your taxes, whereas with the structured settlement, you will not be taxed. If the amount you are receiving is not a very large amount, taking the lump sum will not cost you much on taxes. If the amount of money you are receiving is large, taking the money over time will not cost you anything on taxes.
If you were injured and are receiving money for your injury, you must look at how that injury will affect you in the future. Some injuries will require additional surgery and doctors appointments. If this is the case, taking a structured settlement would be the best option, as to ensure you will have money for these expenses down the line. If your injury is not as serious, and it will not require attention and additional money down the line, you can take a lump sum with no worry. Also, if your settlement is not large, there may be no advantage to having it as a structured settlement, and taking it up front would not disadvantage you in any way.
Unfortunately, people who receive a lump sum often spend their money quickly and when the time comes that they need the money, they don’t have it. This is one advantage to a structured settlement; it ensures that you have the money when you need it. However, if you are planning on doing something right away with your settlement money, like buying a car or a house, it would be prudent to receive a lump sum.
Looking at your own unique situation, a structured settlement could be exactly what you need. It provides peace of mind, ensures you will have your money when you need it, and gives you a tax break that you would not revive with a lump sum. Many people choose the structured settlement route because it proves to have many advantages, and provides them with exactly what they need. However, it is not the right route for everyone. Although taking a lump sum can be risky, sometimes it is the better option for a specific case. It is important to talk with your insurance company and lawyer to decide the best decision for you.