Structured Settlements in Personal Injury Cases
A personal injury case is by definition a legal action where the injured party retains an attorney and the attorney works to secure a settlement for their client that compensates them fully for the damage incurred. A personal injury settlement must take into account several factors. Before a lawyer can specify an amount of money, they must be clear as to the nature of the injury, how long the recovery process can last, and finally, if there are lasting repercussions or a possibility of future problems. When a dollar amount is fixed upon, normally the lawyers for both sides will sit down to negotiate the amount and the terms.
If a settlement is not agreed upon, the personal injury case can go to trial where a judge or jury can decide the settlement amount. Most defense attorneys will try to reach an agreeable settlement amount out of court as the settlements given by juries are widely varied and can potentially be very damaging to their client.
In a personal injury case where the injured party receives a settlement, there are two ways the victim can be compensated - lump sum or periodic payments. Before 1982, all payments were lump sum payments. This was not necessarily a bad thing, but it was difficult for some people to invest the money properly to ensure future financial stability.
Structured settlements are an alternative methostrd of receiving payment for a settlement. With a structured settlement, periodic payments are made on a monthly or annual basis. The injured party is guaranteed an income over time in this fashion. The financial stability afforded by this payment arrangement is welcome for people who will need to receive long-term care.
Research has shown that people who receive lump sum payouts are typically broke within two months to five years of receiving the payment. Most people just do not have the experience needed to invest the money to ensure future financial security. Even if the lump sum payment is invested, the money earned on those investments is taxable.
Structured settlement income is not subject to state or Federal tax. In addition, the money comes in smaller, easier to manage increments, which allows the injured party to handle the money themselves instead of hiring a financial advisor. There are specific types of cases where structured settlements make the most sense. Any type of injury that requires long-term or permanent health care resources; any type of injury where minor children are left to a guardian; and any type of injury that keeps a worker from returning to their job for an extended period are all perfect candidates for structure settlements.
Structured settlements are also beneficial to the party making the payments. By setting up an annuity, they are investing the funds and the payouts go directly to the victim. This type of payment is typically a smaller amount than a lump sum payment as well. Before you consider accepting a structured settlement, discuss it with your lawyer and check out the information at stern-lawfirm.com for more information regarding personal injury settlements.