Most Utah car accident claims are settled out of court, and in some cases, the injured party receives compensation in the form of a single lump sum payment. In others, auto accident attorneys negotiate structured settlements.
What is a structured settlement? The arrangement allows for compensation to be paid out over a period of time, through a series of regular payments. Handled properly, a settlement with an extended payment schedule can be advantageous for an accident victim, particularly one with catastrophic injuries. But while a structured injury settlement is a good option for some, it isn’t necessarily right for everyone.
As a general rule, auto accident attorneys consider structured settlements in cases involving large sums of money. For more on how the arrangement works, take a look at the following.
Let’s say that you’ve resolved your car accident claim and have agreed to a structured settlement. What can you expect?
You’ll have a steady stream of income, as you’ll be receiving periodic payments over the course of several years or, perhaps, for the rest of your life. The specific terms will be tailored to meet your needs. A skilled auto accident attorney can negotiate:
With a structured injury settlement, an auto accident attorney can design the payment plan to suit your personal preferences. All of the terms are negotiable, so you can get creative with the structuring – any arrangement may be possible as long as your settlement award is large enough.
When you understand the benefits of a structured injury settlement, you may know whether it might be an option for you. Consulting an experienced auto accident attorney is a good idea, of course, but here are the upsides to accepting a structured settlement.
Financial Certainty
A lump sum payment may provide you with a fresh financial start, and getting a large amount of money can leave you thinking that you’ll always have enough cash to meet your needs. But if you opt to receive payments over time instead, you’ll be more likely to set a realistic budget based on your actual income.
Money Management
You’ve no doubt heard stories about lottery winners who lose it all in a very short period of time. That can happen to anyone who receives lump sum compensation in a Utah auto accident claim, too. Getting a structured injury settlement is a good safeguard against undue influence and poor investment decisions.
Reasonable Expectations
Receiving a large amount of money can result in pressure from family and friends who are facing financial difficulties – and turning everyone down isn’t easy. With a structured settlement, you can preemptively avoid this potential burden. If you want to help someone, you can, but the bulk of your funds will be protected.
Tax Benefits
Proceeds from structured injury settlements are considered tax-free, so deciding against lump sum compensation could mean paying a good deal less in taxes. Exceptions may apply, however, and some portions of your award could be taxable. An experienced auto accident attorney can explain your tax liability.
As with most everything in life, structured injury settlements have both plusses and minuses. Some people who win Utah auto accident claims prefer lump sum payments, so you should certainly consider the following downsides to structured settlements.
Less Control
After the terms of a structured settlement are finalized, little can be done to modify the arrangement. You won’t have the power to manage your money, the freedom to make investments or the ability to handle large unexpected expenses. If you want to be in command of your cash, you may be better off with lump sum compensation.
Vulnerability
A qualified auto accident attorney will structure the settlement arrangements to meet your financial needs, but economic conditions aren’t set in stone. Inflation, recession and changes to aggregate demand are constant threats – and your payments may end up being too small if there’s an unexpected fluctuation in the economy.
Loss of Public Benefits
If you accept a structured injury settlement, you could become ineligible for public benefits. That could be particularly problematic if you need ongoing medical care and don’t have private health insurance. Setting up a trust may allow you to avoid this issue, but you may need help from an experienced attorney to keep receiving benefits.
The decision on whether to go with lump sum compensation or a structured injury settlement is yours to make. The right auto accident attorney will consider your needs and preferences, as you deserve a payment arrangement that works for you.
Regardless of which way you’re leaning, the experienced and knowledgeable legal team at William R. Rawlings & Associates can advise you on your settlement payment options. Our Utah law firm settles car accident claims on a regular basis, and with over 35 years of experience in the field of personal injury law, we know how to protect our clients’ interests.
To get more information on structured settlements, or to arrange for a free, no-obligation consultation with a highly skilled Utah auto accident attorney, contact William R. Rawlings & Associates today.