If you win or settle a lawsuit, you may receive a lump-sum payment or a structured settlement. With a lump-sum payment, you receive the full amount of your settlement upfront. Comparatively, with a structured settlement, you receive smaller tax-free payments at regular intervals in lieu of a lump sum.
At Silver Dollar Financial, we offer lawsuit loans for a wide range of personal injury cases, including those involving structured settlements. Get in touch with our team today. We can answer any questions you have about the benefits of structured settlements, our pre-settlement legal funding, and more.
What Is a Structured Settlement?
A structured settlement is structured in a way that differs from that of a traditional lump-sum payment. The settlement allows you to forgo a lump-sum payment. Rather, you can structure your settlement in a way that allows you to receive smaller amounts of money monthly or at another interval.
In a lawsuit, you and a defendant can reach a structured-settlement agreement. When you do, the defendant agrees to pay you a certain amount periodically for a designated amount of time. From here, you receive payments until the defendant’s obligation is fulfilled.
You can explore a structured settlement with personal injury lawsuits and many others. A clear understanding of structured settlements and lump-sum payments in lawsuits is a must. If you know the differences between the two, you can decide on a lawsuit payment structure that aligns with your budget.
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Why Should I Consider a Structured Settlement?
It is in your best interest to consider a structured settlement in your lawsuit. Key reasons why plaintiffs choose structured settlements over lump-sum payments include:
You May Be Able to Receive More Money than You Would Versus a Lump-Sum Payment
A structured settlement is tax-free. On the other hand, there are instances in which you are required to pay taxes on a lump-sum payment. Therefore, if you want to maximize your settlement, a structured settlement may prove to be the best option.
A Structured Settlement Has No Effect on Any Government Benefits You Receive
You do not have to worry about a structured settlement affecting disability benefits or any others you receive from the government. The settlement gives you money to use however you choose. It is not counted as income, and as such, has no effect on any government benefits you receive.
Many Structured-Settlement Options Are Available
You and the defendant in your lawsuit decide how to structure your settlement. This gives you the flexibility to set up increasing or decreasing payments over the duration of your structured settlement. You can even choose to defer structured-settlement payments to later in life.
A Structured Settlement Lasts a Lifetime
You can designate an heir that receives your structured-settlement payments if you pass away. This allows a family member or another heir to keep getting your payments for the length of your structured settlement. Regardless of who receives the payments in your structured settlement, these payments remain tax-free.
If you have concerns or questions about a structured settlement, you can share them with your attorney. This allows you to weigh the pros and cons of a structured settlement versus a lump-sum payment. If you decide to move forward with a structured settlement, your lawyer will help you put one together that meets your expectations.
How Can I Determine the Best Structured-Settlement Payment Option?
You and your attorney can work together to identify the ideal structured-settlement payment option. At this point, it is important to consider the following factors:
- Your tax status
- How you intend to use your settlement money
- How you will manage your settlement money
There can be times when a structured settlement is the best option for you. Or, you may find that a lump-sum payment is ideal. You and your attorney can assess both options in detail.
How Long Does a Structured Settlement Last?
There is no restriction on the amount of time for a structured settlement. You and the defendant decide on a length that aligns with both parties’ best interests. Once your structured-settlement agreement is in place, it remains intact until further notice.
For some plaintiffs, it is beneficial to structure their settlement to receive larger payments upfront. If a plaintiff has urgent medical bills or other pressing expenses that need to be paid off, they can structure their settlement in a way that allows them to pay these costs right away. Then, the plaintiff can get smaller payments toward the end of their settlement’s payment schedule.
Meanwhile, a plaintiff that has no pressing costs may prefer a structured settlement in which they received smaller payments at the beginning. There is also the option to get the same payment each month for the life of a structured settlement. You may have the option to get a structured settlement with payments that extend 10 years or longer, too.
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How Do I Get a Structured Settlement?
Your attorney can help you set up a structured settlement. In this scenario, your lawyer can work with the defendant’s lawyer to structure your settlement. If all parties agree to the terms of your structured settlement, you will be able to receive payments at your preferred intervals.
It can take weeks or months to craft a structured settlement. However, if you want to reap the full benefits of a structured settlement, you must remain persistent. Your attorney will do everything in their power to ensure you can get the structured settlement you want in as little time as possible.
Of course, if your litigation is ongoing, you can request a lawsuit loan. This allows you to receive money that you can use until your case is resolved. A lawsuit loan is based on your settlement amount, and you only need to repay it if you lose your case.
How Can I Get a Pre-Settlement Loan Based on a Structured Settlement?
Silver Dollar Financial has friendly, knowledgeable pre-settlement funding specialists on staff to respond to any questions you have. To learn more, please contact us today.