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Lump Sum Payments Or Structured Settlements

Structured Settlements and Lump Sum Payments are often discussed at the same time. After all, a claimant can settle for monthly payments which can spread out over a period of many years, or even a lifetime, or they can accept one large lump-sum payment. Let’s take a look at the total picture, and what is very often the best advice.

If you are the victim on another person’s negligence, or misdeeds, you should receive financial compensation for your injuries and medical expenses. There is more than one way to receive the compensation, and you should be aware of them. In order to make an informed decision between a lump-sum payment, or a structured settlement, you must understand how each is different.

As an example for this discussion, let’s look at Marty, who received a $900,000.00 settlement, after suffering a permanent disability as the result of an automobile accident that was not his fault. This is a challenging situation that Marty finds himself in, as he can request a lump-sum payment, or accept it as a structured settlement, which means a steady flow of funds. If Marty makes the wrong decision, ir could have a huge impact on his life in a negative way.

 

Advantages Of A Structured Settlement

Lump Sum Payments are subject to stricter tax regulations, while settlement payments are free of any income tax obligations at either the Federal or State level. The unfortunate fact is that many people that accept the Lump Sum Payment option act in an irresponsible manner, and are often forced into Bankruptcy. There are plenty of stories of lottery winners going through all of their winnings and ending up on the streets.

If Marty takes a large lump sum, he is free to do with it as he pleases. He can open a business, and it can close down also. It is a gamble that the claimant will know how to handle the sudden windfall of cash, and not turn it into a nightmare. There is a great temptation to go out and buy a Bentley when you have a suitcase full of cash laying around.

At least with a structured settlement, there will be a steady flow of funds coming in, and cannot be spent on large purchases. When a lump-sum is received, people come out of the woodwork, and start asking for loans. People you never heard of will claim to be your distant cousin. Just the emotional stress of managing the lump-sum can be enormous. 

Especially in the case of a disabled individual, structured settlement payments will give them a feeling of security, knowing that they do not have to live in fear of not having money to pay the bills.

Einstein Structured Settlements has been helping people make the right decision for their own unique, individual circumstances for many years. All it takes is a call, and an Einstein Account Executive will explain everything to you in layman’s terms. They want you to be well educated, as a well educated customer will see that Einstein is the best at what they do.