Three Questions to Ask Yourself Before Accepting a Structured Settlement

Structured settlement brokers

One of the most common resolutions for a personal injury lawsuit is a structured settlement. In fact, in the early 1980’s U.S. Congress adopted tax rules for the purpose of encouraging the use of structured settlements in personal injury cases, and about one in three personal injury claimants are offered a settlement. There are typically two ways to receive a settlement — in the form of annuity payments or in a lump sum. Here are a few questions to ask yourself to see which is right for you.

Do I Need a Lump Sum?
Ask yourself if you really need a structured settlement lump sum. Have bills or other expenses piled up in the time after your injury? Take your current debt or financial needs into account and be very realistic about what you owe, what your current resources are, and what you actually need to be able to pay it off. Don’t accept a structured settlement lump sum because it will feel like winning the lottery

Will I Be Able to Manage a Lump Sum?
Another question you need to ask yourself before accepting structured settlement money is whether or not you have the skills to effectively manage it. Some people just don’t have the discipline to handle coming into a large sum of money and being able to manage it effectively. If you don’t think you can, settle for settlement annuity payments instead.

What Other Forms of Income Do I Have
Ask yourself what other forms of income you have now and what will be available to you in the future. If you are able to work and receive a steady paycheck, then you my not have a need for regular annuity payments and may be able to use the lump sum for immediate expenses.

If you’re already locked into periodic payments, this can pose a problem because the agreement cannot be changed; however, if you need cash for your structured settlement, there are ways to get it. Some companies pay cash for structured settlements in a lump sum and take over the annuity, but this can be a complicated process altogether and needs serious thought.