Posted on: 24 June 2015
If you have recently reached a settlement agreement with an insurance company or individual for a personal injury lawsuit, you have two options before you. You could take all the money from the settlement upfront, which is known as a lump sum payment. Or you could have the settlement paid out in payments over a set period of time. This is commonly known as a structured settlement annuity. Choosing a structured settlement annuity comes with specific financial and tax benefits.
The Settlement Is Tax Free
One of the biggest advantages of a structured settlement annuity is that it is tax free. That means that your settlement is never going to be taxed. Ten years down the road, no matter what type of financial situation you are in, your settlement payments will still be tax-free.
Your Settlement Can't Be Touched
Another great thing about a personal injury or worker's compensation settlement is that it can't be touched by the courts. If for some reason in the future you go through bankruptcy proceedings, the money you get from your settlement will not be taken away from you or used to settle your other debts.
You'll Have Guaranteed Income Until The Settlement Is Paid In Full
Another important benefit that comes with a structured settlement plan is that you'll have a guaranteed income until the settlement is paid in full. You can work with the company or individual who will be paying the settlement to come up with a payment plan. It is important to remember, once you make this plan, it generally cannot be changed.
You can choose to get paid every month, just like a regular paycheck. Or you can choose to get paid quarterly or annually. It is important to think carefully about how you want this money split up and what your financial needs in the future will be. You should also take into consideration how good you are at budgeting when you make this decision; if you tend to spend all the money you have, monthly payments will ensure that you have the money you need. If you are good at planning, then quarterly or annually payments may better suit your needs.
If you are negotiating a structured settlement annuity, keep in mind that it is always going to be tax-free protected money to provide for your needs. It is guaranteed income where you are able to dictate, up-front, how you want the payments spread out. As long as the settlement lasts, you will not have to worry about caring for the needs the settlement was meant to address. Talk to your attorney today about setting up a payment plan for your settlement. For more information, contact a professional like Denali Law Group.Share