After you’ve won or settled your personal injury case, a decision has to be made regarding how to receive your compensation. The decision to go with a lump sum or structured settlement can be difficult, and there are pros and cons with each. Below, the personal injury attorneys at Lipkin & Higgins have provided some of the positives and negatives for both lump sum and structured settlements.
Lump Sum Settlement – You receive all of your money now
- Provides the immediate availability of cash - A lump sum settlement provides a large, one-time payment.
- May be at risk of being spent too quickly - Once depleted, the money is forever gone.
- On the other hand, provides you with opportunity of making significant changes to your present lifestyle.
- Provides a stable, known return over time - Rather than getting all of your settlement at once, a structured approach provides you with payments over time. This eliminates the risk of depleting your settlement.
- Cannot be altered over time - With structured settlements, you’re unable to alter the payment schedule you’ve initially chosen without a substantial penalty.
Lump sum and structured settlements each have pros and cons. The decision should be based on your personal circumstances and needs. It’s important that you speak to your personal injury attorney, accountant or financial advisor before making a decision regarding the format with which to accept your settlement proceeds.