Did you know that only 1% of all civil cases filed in federal court are resolved by trial? These days, a lot of cases get settled outside of court.
If you are involved in a lawsuit and have the choice to settle, you should! However, the type of settlement you choose can dictate your financial situation in the future.
Keep reading to learn the benefits of a structured settlement.
Helps With Cost of Living
One of the main benefits of having a structured settlement is that it can be set up with the cost of living fluctuation in mind. Since the cost of living changes each year, the settlement adjusts to the change.
In short, a structured settlement will help you pay for your day-to-day needs.
Another one of the benefits of a structured settlement is that it is a form of money management. This can protect the owner of the settlement from spending money all in one place or making bad investments.
With a structured settlement, you are paid out over a specific time frame. This acts as monthly supplemental income.
Most plaintiffs who receive a lump sum payout spend the money quickly. This leads to problems with finances down the line.
Usually, a structured settlement annuity is non-taxable. The exception to this is any money settled from emotional damage.
Physical personal injury settlements are always non-taxable. Putting your settlement money will save you from paying large tax amounts on the funds at once.
When you receive a structured settlement payout, you don’t have to worry about those funds being affected by market fluctuations. Payments won’t deplete faster if the market is crashing.
This means the amount won’t increase in a flourishing market either. However, this makes payments easier to budget.
A structured annuity settlement typically acquires interest over time. With the possible interest, your settlement becomes worth more in the long run.
If you receive a lump sum payment, it will not grow any interest.
You can customize your structured settlement to fit your needs. You have a say in the following factors:
- Payment amount
- Frequency of payment
- Occassional lump sum dumps
- How much time the money stretches over
Put your best interest in mind to decide on these factors because you can’t change the terms once finalized.
Possibility to Sell
If you come across an emergency in your life that requires more money than you have, you can sell some or all of your structured settlement payments for a lump sum.
Someone who buys structured settlements will offer you a lump sum amount based on future payments. Common reasons people sell their structured settlements include:
- Buying a home
- Starting a business
- Paying off debt
- Upgrading or repairing a vehicle
A court will need to approve your reason before you sell.
Benefits of Having a Structured Settlement
If you were injured, you can receive compensation from a lawsuit in the form of a structured settlement. You might have the option to choose between a large lump sum payment and periodic payments from a settlement.
In general, choosing a structured settlement has more benefits. If you want to take advantage of the benefits above, structured settlements are the way to go.
For more informative articles like this, check out the other posts on our website.