Paying for a legal dispute of any kind takes time and money. Once the claim is resolved, you are usually given the choice of either a structured settlement or a one-time lump sum payment. Before deciding which choice is best for you, there are several things you should consider.
To begin, you must know what a structured settlement and a lump sum payment are. A structured settlement revolves around a planned payment system.
Generally, insurance companies offer this to resolve personal injury cases like car accidents, etc. If the “victim” accepts a settlement, this is considered a voluntary agreement where the victim will receive tax-free payments over a few years
to meet future expenses and living needs. This is great for people who need long-term income. In contrast, a one-time lump sum payment is exactly that—a payment made one time.
There are advantages and disadvantages to each payment method, and everyone’s financial situation is different. A lottery winner, for example, generally gets a structured settlement. However, they also have the option of signing a waiver to receive a one-time lump sum payment.
Everyone is different. Other considerations include current income needs, health, risk, inflation, convenience, cost comparison, and taxes. If you are in a situation requiring you to make a decision like this, consult an accountant and an attorney for better direction and insight.