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What is a Structured Settlement and Should You Accept One?


When our clients receive compensation after an accident, they often have a choice of how to receive it. They can either accept a lump sum payment or receive monthly payments over several years. This second option is called a structured settlement, and it is an attractive option, depending on the circumstances.

There are advantages and disadvantages to accepting a structured settlement over a lump sum, which our Delray Beach personal injury lawyers explore below. Please contact Earnhart Law today if you have been injured in an accident.

Benefits of a Structured Settlement

Some people want all of their money right away. But there are some benefits to accepting structured settlements:

  • Receiving a structured settlement can help you manage your money. You can’t blow everything if you receive only a small amount each month. For those who aren’t good at saving, a structured settlement can be a big benefit. This is particularly true if you are permanently disabled and will have future medical needs. With a structured settlement, you can ensure that your medical care is paid for.
  • Tax advantages. There might be tax benefits to receiving a structured settlement as opposed to a lump sum. If you take advantage of the tax savings, you will end up with much more money for your injuries.

We should also point out that settlements can be structured in many different ways. For example, you might have pressing expenses that need to be paid off immediately. It is often possible to receive a decent amount of money up front but then spread out the remainder in monthly installments. Other people want a lump sum at the end of the payment period, typically for tax reasons. You can also decide the length of the structure.

Disadvantages of a Structured Settlement

You might be thinking, “But of course I want a structured settlement!” After all, who doesn’t want tax savings? But there are some negatives to consider as well:

  • You might want to buy a home or investment property with your settlement. It can be hard to do that with a structured settlement. At a minimum, you need to wait until you have saved up enough money, and many people struggle to do that.
  • Your settlement might be too small. If you get $150,000 or more, then spreading out payments means you get a decent amount each month. But if your settlement was smaller, say $60,000, then spreading it out makes less sense.

Talk about how to receive your settlement with your attorney. Details about a structured settlement are usually included in a settlement agreement, so you should be having this discussion with your lawyer before you sign on the dotted line.

At Earnhart Law, we have extensive experience with structured settlements and will discuss the advantages and disadvantages with our clients, whose best interests are always at the forefront of our minds.

If you were injured in an accident, please contact us today. Our attorneys will meet for a free consultation if you call 561-265-2220.


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