Structured Settlements in Florida - Should You Accept?

When you file a personal injury claim and are awarded compensation, there are several ways you can choose to receive it. You can choose to accept your compensation as a lump sum payment, or you can choose to receive monthly payments over the course of several years. The latter is also known as a structured settlement offer and depending on your circumstances, may be ideal.

The Benefits of a Structured Settlement Offer

If you want your money right away, then you may want the lump sum option. However, you should also consider the benefits of a structured settlement offer as well and how it can help.

Better Money Management

When you receive a structured settlement, you have the opportunity to manage your money better. You won't spend all the money you receive in a lump sum because you are only receiving a small amount each month. So, if you aren't good at saving your money, this is the ideal situation. You can also use these payments to ensure your medical care and payments are up to date.

Tax Advantages

There are also tax advantages involved with accepting a structured settlement offer. So, taking advantage of the tax savings by opting out of a lump sum payment, you can actually end up with even more money for the injuries you sustained. Many structured settlement payments are free from taxation, including federal taxes, state taxes, taxes on interest, dividends, capital gains, and AMT.

The Disadvantages

Now we should take a look at some disadvantages to give you a clear picture of what to expect. If you wanted to use your money for a home or investment property after you settle, then you may want the lump sum payment. The structured settlement offer may not be enough money to do what you need to do.

It also may make more sense to choose a lump sum payment if the payment is on the lower end. There isn't much sense in dividing payments for a small amount over several months or years. So, if you are entitled to $60,000 in settlements, then you may not want to spread it out. However, if you are expecting $100,000 or more, then spreading it out in smaller monthly payments may make more sense in the long run.

Calculating the Offer

Structured settlements are also often referred to as future income streams. They are calculated in terms of present value. When determining present value, you are determining the value of the future income stream as if it were sitting in the bank today. Your personal injury attorney can help advise on how to calculate structured settlements because they can be complicated.

Discussing Your Options

No matter which option you choose, you will want to discuss it with your personal injury attorney before making your final decision. They can provide you with the details regarding your structured settlement offer and if there are other advantages or disadvantages for one over the other. It allows you to make a more informed decision when it comes to your settlement money.