The end goal of many a lawsuit is not actually going to trial. Instead, the plaintiff seeks to secure a handsome settlement to compensate for whatever injury they have sustained at the fault of the defendant.
If you’ve found yourself in a situation where you’re on the receiving end of a good settlement, then you may be wondering whether to go with a lump-sum payment or a structured settlement. And if you don’t yet know the answer to the question of what is a structured settlement, that can make the decision all the more confusing.
Luckily for you, we’ve written this article! In it, we’ll explain everything you need to know about a structured settlement and whether this kind of compensation is right for you.
What Is a Structured Settlement?
Think of a structured settlement as a settlement that pays out over time rather than all at once. For instance, if you won a million dollars in your structured settlement, the money would not payout immediately. Instead, you would receive a portion of the money at regular intervals until you have received the full sum.
There are several reasons why you might opt for a structured settlement.
For one, it’s important to note that having a lot of money all at once can be dangerously unhealthy for those who are unused to managing large sums of money. Consequently, one could be at risk of mismanaging the money and losing it all in short order.
That’s where the structured settlement comes into play. With a structured annuity settlement, the plaintiff will receive all the money but in a safer way where they are not able to mismanage all of it at once.
Due to the net present value of money, it is also in the defendant’s interest to pay a structured settlement instead of providing immediate compensation to you. They would prefer to finance a structured settlement using Rightway Funding or a similar service. Thus, this could be a valuable negotiation tactic to use when deciding on the terms of the settlement.
When Should I Use a Lump-Sum Payment?
There are some instances when you may want a lump-sum payment. If you’re confident of being able to manage the money received well, then a lump-sum might make the most sense.
You could invest all of the money as soon as you receive it, allowing you to grow that nest egg indefinitely. It would take a lot more time to realize the same amount of returns if the money was paid to you in a structured settlement.
Solve Your Legal Case
There you have it. Now that you know the answer to what is a structured settlement, you should also have a better idea of when you should opt for one instead of a lump-sum payment.
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