Is A Structured Settlement the Right Choice for You?
These days many settlements are made in the structured format. In case you have been injured in a road accident, you might need money from your settlement immediately to pay your medical bills, and would rather have it now than wait for a large sum of money that may come to you later.
You should carefully weigh the pros and cons before you decide on whether you should opt for a structured settlement. If you need money for recurring medical expenses on account of your injury or anticipate prolonged physical therapy in order to recuperate, then a structured settlement might be a good idea.
The payment in case of a structured settlement is usually made from interest accruing on a purchased annuity. A structured settlement is binding so once the agreement has been signed, you cannot change your mind about it. If you wish to modify the agreement later because of some unforeseen expenses, you need to go to an attorney to change the terms of your agreement. You cannot use your structured settlement to obtain a new loan either.
There are companies that will purchase the rights to your structured settlement for a lump sum of cash, but they are in it for the investment potential. They will pay you the current day value of your settlement amount, excluding the invested sum. The rules do vary in different states regarding structured settlements. The amount received from structured settlements is taxable in some states.
If you are consulting an attorney to help you with your structured settlement, be sure you fully assess your situation and requirements carefully. Some things to consider before making a decision are:
What are the advantages and disadvantages of the program? Does the lawyer have a track record in negotiating structured settlements? Which is best for your own situation, a structured settlement or a lump sum of money? Will there be any tax benefit if you opt for a structured settlement? Will you get adequate money on time to cover all your expenses? How is it going to be in case of future contingencies, and if your requirement for money increases? Is it possible to change the terms of the structured settlement later? Can you decide later to change the program and opt for a lump sum payment?
It is a good idea to have a list of questions ready before you speak to an attorney. The questions should be specific and pertinent. Once you meet the attorneys you will be able to judge their experience and expertise in dealing with such matters. Be sure that your attorney has your best interest at heart, and if in doubt, get a second opinion or consult with your own financial planner.
After you have had all your questions answered, you can already make an informed decision. Remember that this is a very important decision to make, as it will affect not only your future but your family’s as well. So enter into an agreement only if you are completely sure that you have made the right decision.
Last 5 posts by Mark Benedict Young
- Securing Your Family's Financial Future Through Life Insurance - May 21st, 2008
- Structured Settlements From Lawsuits - May 6th, 2008
- Cashing Out Structured Settlements - May 2nd, 2008
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