Most slip and fall cases are settled with the insurance company for the negligent business or property owner paying the victim the settlement amount in a lump sum. Depending on your circumstances, you may prefer to receive your payments in a structured settlement where you receive your compensation over a period of time, sometimes with a larger initial payment. But is a structured settlement right for you?
Pros of a Structured Settlement
Like with many decisions you must make in your case, there are pros and cons to accepting your compensation in a structured settlement. These payment arrangements are sometimes used when the victim is a minor or has suffered catastrophic injuries that have permanently disabled him and will require long-term medical care or other supportive services. The benefits of a structured settlement include:
Won’t spend the money too fast
Sadly, many accident victims who receive a lump sum payment do not budget their settlement wisely or simply cannot handle large sums of money. The result is they do not have the money they need down the road—which the settlement was designed to provide for. A structured settlement avoids this risk. FOr mroe information see section How You Get Paid in a Structured Settlement below.
While much of the settlement amount is generally not taxable income, you could owe taxes on the interest and dividends if you invest your settlement proceeds or save them.
Can replace lost income
If you are permanently disabled or must make a career change due to your injuries, a structured settlement can replace your lost income for a period of time or for your lifetime.
Can fund future needs
If you anticipate higher expenses in the future, such as college expenses for your children or expensive medical treatments, you can structure the settlement so that you receive the money for these expenses at the time you incur them.
When a Structured Settlement May Not Be Right for You
Structured settlements are not always the best option when settling a slip and fall case. Reasons why you may not want to receive your settlement proceeds over time include:
Your current needs
You may have gotten behind in your monthly bills while you were off work recovering from your injuries or have a big expense you need to pay now. Receiving your payment in a lump sum settlement could help you pay these expenses and get on with your life.
When payments are made through a structured settlement, the insurance company often purchases an annuity insurance policy which pays the victim a monthly payment over a certain amount of time or his life. These policies may not be a good investment that will grow over time. You may prefer to receive a lump sum payment and invest the portion yourself that you do not need right away.
Payments are too small
You may have underestimated the monthly expenses you will need to pay out of the structured settlement payments in the future or economic factors you cannot predict could change your future needs. With a structured settlement, you cannot go back and renegotiate your payments if you later find that you need more money.
How You Get Paid in a Structured Settlement
A structured settlement is an agreement between you and the insurance company to pay you the settlement amount in installments spread out over a number of years or for your life. The terms of the structured settlement are negotiable, and you want to time the receipt of your payments to be most beneficial to you. You could structure your settlement in a number of ways:
Larger initial payment
If you have been off work for a long time with little income, you may have gotten behind in your bills. A larger lump sum payment could enable you to catch them up or you may want a large first payment to pay off your mortgage or purchase a new vehicle. Later monthly payments would be smaller to replace your monthly lost income.
Bonus amounts in particular years
Some settlements are created to provide a yearly income, but also a larger amount in years when the victim anticipates high additional expenses, like college tuition, later expensive surgery, or needed home improvements or modifications.
Payments increase in later years
In some structured settlements, the payments start out small but increase at a later time. This could be helpful if you know you will need additional monthly income later on in your life.
In some cases, the victim may choose to delay his payments until a later date—for example, when he retires. You may want to choose this option if you or your spouse is still working and you will need the monthly income more at a later date.
Often the insurance company will provide an annuity policy that pays the victim the structured settlement amount under the terms the parties agreed upon. There are pros and cons to structured settlements. They can be complex and could result in tax consequences, depending on your circumstances. That is why it is critical to obtain advice from an experienced slip and fall attorney before agreeing to a structured settlement.
Have You Been Injured In A Henderson Slip and Fall Accident?
If you've been injured in a slip and fall you need to speak with an experienced slip and fall lawyer as soon as possible. Please contact us online or call our Henderson office directly at 702.405.6000 to schedule a free consultation with our slip and fall attorneys.