When you find out the good news that you won your personal injury case, you will probably be ecstatic and relieved. Winning a personal injury case often involves receiving a large settlement for the injuries and damages you experienced. When you find out your settlement amount, you may be given two options for receiving the money. Before you choose one, it's important to analyze which would be better for you.
The two choices
The two choices you may be given are getting a lump sum payment or a structured settlement (also called an annuity). Settlements received from personal injury cases are almost always exempt from taxes (meaning they are not taxable), and it does not matter whether you receive the money in a lump sum or an annuity.
The difference is that with a lump sum, you will receive the entire amount now, all at once. Your lawyer's fees will be deducted from this though.
With a structured settlement, your amount will be divided up and paid to you in a series of payments. These payments may be monthly or annually, and they can last for 10 years or longer. You may get to choose the number of years and payments for the structured settlement if you choose this option.
How to choose the right one for you
Before you rush into making a decision, you may want to really think about this decision. Getting all the money at once might sound like a great idea, but have you considered how well you manage money? If you are not a good money manager, this might not be a good option.
Another thing to consider is that if you take a lump sum payment and invest the money, you will pay taxes on the interest you earn. If the money is left in an annuity, you will never pay taxes on the money or the interest it earns.
Choosing a structured settlement is often a better choice simply because it is guaranteed income for a certain length of time, but if you really want to buy a house, or any type of large asset, getting the money all at once could come in really handy.
You can talk to your personal injury lawyer (such as Edward M Graves Accident and Injury Attorney) about this decision to find out if he or she can give you more advice about what to do. This is a big decision, but both options are great choices.
