Posted: October 24, 2013
In the aftermath of a personal injury lawsuit, it may be difficult for plaintiffs to choose between whether to opt for a structured annuity or a lump sum payment. While both options have their advantages and disadvantages, the following outlines when it may be better to choose a lump sum payment for a personal injury settlement:
- It can be difficult to determine the true value of a structured settlement, making it problematic for a lawyer to assess whether the plaintiff is being sufficiently compensated for his injuries and losses. This can allow unethical insurance agents to take advantage of unknowing plaintiffs.
- If the individual will have primary control over the money (regardless of whether a structured annuity or lump sum payment is chosen), then the IRS could choose to levy some hefty taxes on the settlement. When tax concerns may be an issue, then it’s better for the individual to choose to a lump sum payment.
- When considering the possibility of inflation or a potentially volatile economy, the actual value of a structured annuity may decrease in future years and may not be sufficient to cover an individual’s medical and/or living expenses. In consideration of this, a lump sum payment may be a better option than a structured payment.
It’s important to point out, however, that choosing a lump sum can be problematic for individuals who:
- Run the risk of spending the entirety of the personal injury settlement too soon (as most individuals who choose lump sum payments run through their settlement cash in less than 5 years of getting it)
- Need to rely on the settlement to cover their living expenses and/or medical bills for the foreseeable future.
St. Louis Personal Injury Lawyers
If you have suffered any type of personal injury, contact the St. Louis personal injury lawyers at Brown & Brown Attorneys at Law. We have a long-standing commitment to serving our clients, and we are experienced at aggressively defending our clients’ rights in any legal setting. Our goal is to preserve and promote the rights and welfare of individuals and families who have suffered injuries and losses and/or who need help navigating through the complexities of the court system.
Since 1993, our lawyers have been successfully representing our clients in various areas of personal injury litigation, including car accident lawsuits, premises liability lawsuits, brain injury lawsuits, etc. Our unwavering dedication to the pursuit of justice in every case we handle means that we will work relentlessly to help our clients achieve the best possible outcomes to their cases. One of our primary goals is to help accident victims secure the maximum possible compensation for their injuries and losses so they can focus on their recovery and moving on with their lives. For a free initial consult, email us using the form at the right-hand side of the screen and/or to call us at 573-333-3333 for our Missouri office or at 618-888-8888 for our Illinois office.