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May 22, 2024 | Personal Injury
The process of recovering compensation after sustaining an injury caused by the negligence or intentional actions of another party can be complicated. But after a claim is resolved, victims need their money. Actually receiving the payment once a claim is settled should be the most straightforward part of the process, but even this part of the process can be confusing.
One common method of receiving a personal injury settlement is through a lump sum payment. This means that the injured party receives the entire agreed-upon amount in one transaction. Choosing a lump sum payment allows the recipient to access all of their compensation at once, which can be particularly helpful if there are significant medical bills, major home modifications needed due to the injury, or if the individual wishes to make large purchases like a home.
For example, consider a situation where an individual has sustained serious injuries in a car accident, and the settlement amount agreed upon is $250,000.
If they opt for a lump sum payment option, they will receive the entire $250,000 at once after any legal or administrative fees are deducted. This immediate access to funds can provide significant relief and financial stability to the injured party, allowing them to manage their healthcare and living expenses without the stress of financial strain.
Another option for the disbursement of personal injury settlements is through structured settlements. This involves receiving the settlement amount in regular payments over a specified period. This method can provide a predictable income stream, which might be especially helpful for managing ongoing medical expenses or providing consistent living expenses, particularly if the injury affects the victim’s ability to work.
An example of a structured settlement might be a case where the settlement amount is $300,000 to be paid out over 20 years. The recipient might receive monthly or annual payments calculated to distribute the total settlement evenly, adjusted for interest or inflation. This method not only helps in budgeting for long-term needs but can also provide tax benefits, as it may lower the individual’s tax obligations each year compared to receiving a large lump sum.
Deciding whether a lump sum or a structured settlement is more beneficial depends heavily on your unique circumstances. While a lump sum offers immediate access to funds, which can be crucial for covering large, upfront expenses, a structured settlement provides a predictable stream of income, potentially easing long-term financial planning. Consulting with your personal injury attorney and even a financial advisor can help you determine which option best aligns with your specific needs and long-term financial security.
If you are struggling to recover compensation after sustaining an injury caused by the actions of someone else, you should reach out to an attorney as soon as possible. Understanding how you will receive your payments is important, but the process of securing compensation is challenging. A personal injury lawyer in Austin can help walk you through this process and bring you peace of mind.