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Hello, my name is Susan Farris and my hobby is learning about the law. I have an uncle who is an attorney and I've always looked up to him and that's why I find subjects on law very interesting. Through speaking with my uncle and doing research on my own, I've learned about all the different fields of law. Each field of law centers on its own subject and most attorneys specialize in a certain area of law. These include criminal, personal injury, family, bankruptcy, criminal, immigration and business. I find each one of these fields very interesting and I have the utmost admiration for lawyers because they help people through their legal struggles. I wanted to share this information with others who have questions about the different types of attorneys and the law.

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Accident Settlement Choices For Victims: What To Know

Law Blog

Nearly all car accident cases are settled. That means the victim and the insurer for the at-fault driver come to an agreement about compensation. Accident victims may choose between a lump sum settlement or a structured settlement. To find out more and help you decide on the one that works best for you, read on.

The Main Differences in Lump Sum Settlements and Structured Settlements

A lump-sum settlement, as the name explains, is paid all at once in a single, lump sum to the victim. This type of settlement allows the victim instant access to the cash they might need to pay medical bills, buy a new vehicle, and make up for the time missed from work. However, lump-sum settlements may be spent all too quickly and may run out before needs are met. The structured settlement model spreads the settlement amount over many months and years. In some cases, victims with permanent injuries can expect a lifetime of structured payments from the insurer.

More About Structured Settlements

  1. Income is guaranteed. In most cases, the insurer sets up an annuity that is funded with the agreed-upon sum of money. The annuity then disperses the payments to the victims. This prevents the victim from being without income should the insurer stop making the payments.
  2. Be sure you understand the tax consequences. In most cases, settlements are not considered income whether they are lump sum or structured. Part of a settlement, however, could be taxed. Interest paid to the victim along with any punitive damages may be taxable. Speak with both a personal injury lawyer and a financial expert before making the settlement decision.
  3. If an annuity is being used to provide the settlement, victims need to know about any costs associated with this way of being paid. Some states require the insurer to make full financial disclosure concerning annuities, but most do not. There may be fees that must be paid not by the insurer but by the victims with many structured settlement plans.
  4. In some cases, victims can sell their structured settlement and be paid some or all of what they are owed all at once. However, they need to understand the potential costs of doing so.
  5. Ask your personal injury lawyer about a hybrid structured settlement. That means you can be paid a partial lump-sum payment with the remainder set up as structured payments. This could help victims pay some immediate bills while still having long-term income from the settlement.

To learn more about these two settlement choices, speak to a personal injury attorney.  

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28 January 2022