What You Need to Know
So, you’re wondering whether or not you’re eligible for a structured settlement but you know nothing about the subject. What do you do? Do you ignore your pain and attempt to live out the rest of your life to the best of your ability? Or, do you sue the party responsible for the accident and use your structured settlement payments to pay medical bills?
The choice is up to you. If you do pursue a personal injury lawsuit, you’ll want to know all there is to know about structured settlements including how to sell settlement payments. Consider this your primer on the subject. It will help you determine whether or not you’re eligible for payments and it will give you a better idea of the tax savings that you’re entitled to with your structured settlement.
What is a Structured Settlement?
You may have heard a commercial for structured settlement payments and thought to yourself, “What is that? Am I eligible for payments of my own?” The fact of the matter is, some personal injury cases wind up with structured settlements. Let’s explore the idea of structured settlement payments.
A plaintiff in a personal injury lawsuit is often awarded a large sum of money. Rather than receive a single lump sum which is subject to taxes, they choose to receive payments in installments over a certain amount of time. This type of settlement is therefore “structured,” meaning that payment can be provided to the appropriate party in whatever way they see fit.
Payments can be paid in annual installments over the course of a pre-determined number of years or they can be paid in lump sums every couple of years. The purchase of an annuity can help create a structured settlement and guarantee payments in some cases. This allows plaintiffs to receive the most from their personal injury claims.
Advantages of Structured Settlements
There are a number of different advantages of a structured settlement. They include:
- No taxes on annuities. Some people choose to take a lump sum because it gives them a greater dollar amount to invest at once. The problem behind this logic is that a tax-free settlement is subject to taxation because invest earnings are, indeed, taxable. If you choose structured settlement payments, you can live on the money being paid to you and you won’t have to pay a dime to the IRS for it. That’s because each payment is 100% tax-free. This is good news for anyone who questions what they will do after retirement to make ends meet. The allure of a large amount of money all at once is fantastic but steady payments are ideal because life is unpredictable.
- A steady stream of income. You’ll know exactly what to expect in regards to payments. There will be a sense of stability as you receive your payments according to schedule. You’ll know the amount of your checks and you’ll know when to expect your money to arrive. This will help you keep better control of your budget. You can set up automatic payments to your creditors and know that they will be paid because you will be paid.
Stability is the big selling point of structured settlement payments. Rather than receive all of your money at once, you can set it up where you can get a check for the rest of your life. A lump sum payment may seem like a great idea at first but unless invested, it doesn’t do you a world of good. You can avoid taxes and keep a comfortable standard of living by opting for an annuity instead. It’s the most solid option you have.Call Us Today
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