Negotiating a fair settlement for your injury accident means negotiating the details of how you receive your compensation. They may pay you the entire deal in one payment. A one-time payment is called a lump sum payment. On the other hand, you can receive a series of payments over months or years. That is called a structured settlement.
Each type of settlement has advantages and disadvantages, and what is best for you depends on the individual circumstances of your case. You will likely want to discuss the best option for you with your personal injury attorney . Here’s what you need to know about structured vs. lump sum settlements in Nevada injury cases.
What is a structured settlement?
A structured settlement is when you receive your compensation for injuries in smaller, periodic payments, rather than one large payment. You will receive the settlement funds for an extended period of time rather than shortly after settlement. A structured settlement can vary in the frequency with which you are paid and the amount of payments. You can receive payments for years to come.
When you negotiate a structured agreement , you can create whatever terms you want. You can request a large upfront payment to take care of existing medical bills and bills resulting from missed work. You may want more substantial payments up front if you expect your medical bills to decrease over time. On the other hand, you may want your payments to increase over time to justify increasing medical bills as you age or expenses for growing children. You can tailor your structured settlement on terms that you agree with the other party.
How does a structured settlement work?
If you settle your case with a structured settlement, the settlement fund usually goes to an outside insurance company to manage it. The responsible party calculates how much it must pay to finance the agreement. It is a complex calculation. Because funds can grow with investments over time, the responsible party generally pays less than it actually receives in payments.
Some of the terms to consider for your structured settlement include:
- The amount of payments
- The frequency of payments.
- How long you want to receive payments, for example, in years
- If there is a higher payment in advance
- If there is going to be a larger payment at the end.
- If payments increase or decrease over time
- Whether payments end on the death of the recipient or continue for a specified period of time
What are the benefits of a structured injury settlement?
- You don’t run the risk of spending the money too fast.
- There may be tax benefits to receiving the money over a period of time
- You have guarantees that you will have income in the future.
- When friends and family ask for money, they can honestly say they don’t have
What are the disadvantages of a structured settlement?
- You may not be able to pay outstanding bills right away
- There is nothing you can do to change the terms of the agreement if your circumstances change.
- You are not in control of managing the money to make it grow.
- It is not definitive, and it is usually more complicated.
How do you know which type of deal is right for you?
The settlement you need depends on the circumstances of your accident, your personal circumstances, and your preferences. If the payoff is a small or even medium amount, lump sum payments are almost always the best option. When the amount is small, it compensates you for your immediate losses. It is not worth the time and effort to establish a structured solution for what would end up being minimum payments.
When it comes to larger amounts, it’s time to consider whether a structured settlement serves your best interests. Here are some of the things to think about when trying to decide what is best for you:
- Will my medical bills decrease over time?
- Should I expect my medical problems and costs to increase over time based on my current injuries?
- Will I be able to go back to work after a period of time?
- What current bills do I have that a lump sum payment could help me take care of?
- Are there tax benefits I want to take advantage of?
- If I accept a lump sum, will I be able to manage the amount effectively?
- Do I want to avoid requests for gifts and loans from others that might come with a lump sum payment?
Your injury attorney can help you decide what is best for you. The other party may also have some information as you go through the negotiation process that may affect the final settlement in your case. Your attorney can help you understand the tax implications of each option. They can help you assess your personal circumstances, injuries, bills, and expenses to help you evaluate your options and make the best possible decision.
What does the Nevada Supreme Court have to say about structured settlements?
A settlement agreement is a contract that is enforceable by law. If something goes wrong after the parties reach a structured settlement, the courts enforce the agreement in accordance with Nevada contract law. Because a structured settlement is a settlement agreement, the parties can generally fulfill the terms of the agreement without the need for court intervention and appeals.
That means there are only a couple of opinions from the Supreme Court of Nevada that even mention a structured settlement. While the opinions do not go into great detail or create new rules about structured settlements, the opinions recognize that structured settlements are a valid option for victims of personal injury accidents in Nevada.
How can a personal injury attorney help?
An experienced attorney has served thousands of clients and has extensive experience in both structured and lump sum settlements.
They know what should be in a structured agreement to protect their best interests.
Your attorney can help you carefully construct your personal injury claim and negotiate the terms of your settlement and consider all options to reach the best possible resolution.
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