It might be in an individual’s best interest to choose a structured settlement rather than a lump sum payment following a personal injury claim settlement. There are several advantages to these settlement arrangements, but claimants must also consider the disadvantages, which a personal injury attorney in Colorado can help Aurora claimants consider.
Benefits to a Structured Settlement
Lump sum settlements are typically subject to taxation. Choosing a structured settlement may reduce the taxes owed on the personal injury claim settlement by spreading out the payments over a period of time.
Choosing the structured type of settlement can also be a benefit if there are concerns about spending the money unwisely or too quickly. When there is a lot of cash available—such is the case with a lump sum—it can create challenges with spending discipline for some. Spreading out the payments can help reduce the inclination to spend too much money too quickly.
As unpleasant as it might be, there is also the chance that when word gets out a lump sum payment has been received, open hands will come out. Suddenly a lot of people may want a piece of the pie. But this may be avoided when an individual is receiving a settlement through structured payments that are lower than a lump sum.
One of the biggest benefits to choosing a structured settlement over a lump sum is it helps cover future costs. When an injury from an accident necessitates ongoing medical care or treatment—for several months, years or even a lifetime—the money may run out faster with a lump sum. Spreading out the payments can help ensure resources are available to cover these payments as they arise.
Disadvantages to a Structured Settlement
Of course, there are some disadvantages that claimants should discuss with their personal injury attorney in Colorado when considering a structured over a lump sum settlement in an Arvada case. One is that a lump sum may allow the claimant to invest the money that isn’t currently being used. A good investment from a large amount of monies might go farther in the end.
The other disadvantage is that once payments are set, they usually can’t be changed. So if a future need arises, those payments may not be borrowed against.
It’s also important to be aware of insurance companies that take advantage of annuity payments available in a structured settlement by setting significantly high commissions. So in addition to a personal injury attorney in Colorado, it may also be a good idea to talk with a financial expert in Aurora when determining how to receive a settlement.
Determining the Value of a Personal Injury Claim Settlement
Of course, before an individual can even think about how a settlement will be received, its value must be determined. This is where a personal injury attorney n Colorado might be of the most assistance to Aurora claimants.
Most settlements address the economic damages suffered by the claimant. These typically cover medical costs, lost earnings, property damage and other financial issues that have a specific value. Keep in mind that it’s critical to consider future medical bills and lost wages in a settlement as well.
But a settlement might also include noneconomic damages. This type of compensation addresses pain and suffering, emotional distress, disability and other losses that have value in a personal injury claim settlement.
Get Help from a Personal Injury Attorney in Colorado for Aurora Claims
If injured and seeking a personal injury claim settlement, victims in Aurora may consult a personal injury attorney in Colorado like D.J. Banovitz for help settling or litigating their claim or lawsuit. A lawyer may also go over the pros and cons of lump sum and structured settlements.