If you’ve won a personal injury case or reached a settlement with the at-fault party, you might assume you’ll receive your compensation as a single lump sum. But did you know there’s another option? Structured settlements offer a way to receive your compensation in smaller, regular payments over time—helping to provide long-term financial security.
At Sheehan and Barnett, we help injured individuals in Danville and throughout Kentucky make informed decisions about their settlements. Here’s what you need to know about structured settlements and why they might be the right choice for you.
What Is a Structured Settlement?
A structured settlement is a payment arrangement where the money from your settlement is distributed over time rather than as a single lump sum. These payments are typically customized to meet your unique financial needs and can last for years—or even a lifetime.
Here’s how it works:
- The at-fault party (or their insurance company) funds the settlement by purchasing an annuity from a life insurance company.
- The annuity guarantees your regular payments according to a set schedule, which might include:
- Monthly, quarterly, or yearly payments.
- Payments for a set number of years or your entire lifetime.
- Payments that grow over time to account for inflation.
Once your structured settlement is in place, you’ll receive predictable income without worrying about how to manage or invest a large sum of money.
The Benefits of Structured Settlements
Structured settlements offer a variety of advantages, including:
1. Financial Security
Instead of spending a lump sum quickly, structured settlements provide a steady stream of income for years to come.
2. Tax-Free Payments
In most personal injury cases, payments from structured settlements are tax-free at both the federal and state levels. This gives you more value compared to taxable investment income.
3. Customizable to Your Needs
Payments can be tailored to cover your specific expenses, like medical bills, living costs, or even your children’s education.
4. Protection Against Poor Money Management
If you’re worried about spending a lump sum too quickly, structured settlements ensure that your payments are spread out over time.
5. Protection from Creditors
Structured settlements are often protected from creditors and bankruptcy under Kentucky law, keeping your payments secure even during financial hardships.
6. Long-Term Planning
For those with ongoing medical needs or disabilities, structured settlements provide predictable income to cover treatment and ensure access to care.
When Is a Structured Settlement the Best Choice?
Choosing a structured settlement makes the most sense in situations where you need long-term financial stability. It may be the right option if:
- You Need Steady Income: If your injury prevents you from working, structured payments can replace lost wages.
- You Have Ongoing Medical Expenses: Structured settlements can help cover long-term treatment costs.
- You Want Financial Stability: Structured settlements are not affected by market fluctuations, offering reliable income.
- You’re Not Confident Managing a Lump Sum: Handling a large sum of money can be stressful. Structured settlements remove the burden of budgeting and investing.
Are There Any Downsides?
While structured settlements offer many advantages, they aren’t perfect for everyone. The biggest drawback is that the terms are typically non-negotiable. Once agreed upon, you cannot access the entire amount at once, which could be a challenge if unexpected expenses arise.
That’s why it’s important to work with an experienced attorney who can help you weigh the pros and cons and decide whether a structured settlement is right for you.
How Sheehan and Barnett Can Help
At Sheehan and Barnett, we understand that no two personal injury cases are the same. Choosing between a lump sum and a structured settlement depends on your unique circumstances, financial goals, and future needs. Our attorneys are here to guide you through the process and ensure your settlement provides the greatest benefit for you and your family.
� Call us today at 859-236-2641 to schedule a free consultation. We’ll help you navigate your options and secure your financial future.
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