So, your Arizona auto accident attorney has come through for you and you are receiving a settlement based on your injuries. You want to know how it’s going to work and what your financial options are. This is very common and there are two different ways liable parties are going to pay your settlement to you. There are structured settlements and unstructured settlements. Each has its own set of advantages and disadvantages.
A structured settlement is a very common settlement. Structured settlements are paid out to you in installments. When a settlement is for a very large amount of money it is usually required that liable parties be allowed to pay you over the course of many years. Annuities are funds normally purchased and set up for the victim. Usually the payments will come to you once a year, sometimes more often. The way they come is determined by all parties involved. You will want to choose your payment scheduled based on what is going to yield you the most money. Sometimes it is more economical to choose yearly or quarterly payments because in the long run you will receive more money. It may seem beneficial to get your money all at once but if waiting for it will get you more, your Arizona auto accident attorney is going to want you to consider waiting.
On paper it sounds so much better to have your money all in one lump sum. But, a structured settlement has many, many benefits. Especially, it has tax benefits. In most cases of a structured settlement, the receiving party does not have to pay taxes or they pay very little taxes. An unstructured settlement is going to be taxed right away. This is definitely something to consider. A Arizona auto accident attorney is going to want you to consider the long term benefit as well. In the long term you may run into financial troubles. You can depend on your structured settlement to come in and get you through difficult times. This is beneficial to those seriously injured as their medical bills may continue to grow should they need ongoing medical treatment. A structured settlement can really help you get on a great financial path. Structured settlements are not perfect.
There are some disadvantages to receiving your money this way. A good Arizona auto accident attorney will go over these disadvantages with you as well as some others. One disadvantage is the inability to spend money on whatever you want or need. A structured settlement is going to force you to budget and work with what you have when you have it. Sometimes people are very market savvy and having a lump sum payment can result in more financial success for them.
Sometimes injuries are taken care of in a relatively short amount of time but were incredibly expensive, putting the injured party into debt. You may want to pay your medical bills off right away but are not able to with a structured settlement. This could result in a debt you don’t want. It’s never a good idea to sell a structured settlement but some people do. Your Arizona auto accident attorney is not going to recommend selling your structured settlement because that would mean higher taxes paid and a lot less money received. This would not affect your attorney’s money but it still isn’t a good idea for you. Companies that buy settlements and annuities seem to offer it all but they don’t really make good on their offers. Most states tax the sale of structured settlements by nearly half. Do you really want to get less from the company purchasing your settlement and at the same time lose even more money in taxes? Reconsider if you are considering selling your settlement.
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