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Need Help With Your Structured Settlement?

Should You Accept a Structured Settlement?

When someone wins a lawsuit, the damages are typically paid in the form of a single lump-sum payment. However, some people opt for structured settlements instead, in which the damages are paid out over a period of time. If you are in the process of filing a lawsuit and believe that you will win, you probably assume that a lump-sum payment is the way to go. However, it’s worth it to consider a structured settlement as well. Find out why by reading on below.

What is a Structured Settlement?

settlementWith a structured settlement, you receive periodic payments over the course of a fixed period of time. This stands in stark contrast to a lump-sum payment, in which the entire award is paid at once. The latter is simpler for the defendant, but the former holds some advantages to certain types of plaintiffs. Are you one of them?

Structured Settlement Options

There are no set-in-stone rules regarding how a structured settlement should be paid. In fact, almost every aspect of a structured settlement can be negotiated or customized to suit the recipient’s needs, including its duration, the frequency with which payments are made, the amount of each payment and whether or not there’s a lump payment at the beginning or end. You can also choose to have access to additional, larger payments for big-ticket expenses like college tuition or to have your payments increase or decrease over time, which may be useful if you expect your regular income to grow or decrease in the future.

Considerations to Make Regarding Structured Settlements

Even if a structured settlement sounds like the way to go, you should never rush into one. Here are a few things to consider before taking the plunge:

  • How Will You Use the Money? – The way in which you’ll use the money should be taken into consideration when deciding whether or not to use a structured settlement. If the money will be used to replace existing income, a structured settlement is probably the best option. If you need a lot of thinkingit right away, plan to give most of it away to charity or otherwise need access to the majority of it quickly, a lump-sum payment is probably better.
  • How Will it Affect Your Taxes? – Personal injury settlements are usually not taxable, but settlements for punitive damages usually are. Either way, if you take a lump-sum payment, you will have to pay taxes and dividends on the invested portion. By taking a structured settlement instead, you’ll have less cash in the bank and elsewhere, which means you may have a smaller tax obligation.
  • How Will You Manage It? – Another thing to consider is how you will manage the money once you receive it. If you get a lump sum, you will almost certainly need to hire an investment or financial professional to assist you. If you go with a structured settlement instead, you won’t have to manage such a huge amount of money at once and can probably get by without hiring anyone.
  • Can You Control Yourself? – Yet another thing to ask yourself is whether or not you can trust yourself with a huge amount of money. All too often, people receive large lump-sum settlements and blow through them in a few quick years. Also consider how you will manage friends, family members and others who hear about your cash infusion. By opting for a structured settlement, you can put these worries aside.

Cashing Out a Structured Settlement isn’t Easy

One final word of warning: Despite what you may have seen and heard, cashing out a structured settlement is not easy. Regardless of the circumstances, the matter has to go before a judge. The process is usually stressful and takes a long time. You must be able to convince the judge that you legitimately need access to the full amount now. Therefore, if you have any doubts about taking a structured settlement, you probably shouldn’t.


When it comes to structured settlements, every person and situation is different. Whatever you do, don’t rush into taking a structured settlement. Managing the money may be tricky and may require hiring a professional, but it could save you a lot of hassle in the long run.