Personal Injury Settlements - Structured Payments, Or Lump Sum Payout?
For a personal injury settlement based on a court award granted from injuries, such as work accident compensation, and work injury claims, you usually have a few options on how to receive your money.
Just how many of the options apply to a person is determined by the way the award is granted, as well as on the actual laws and regulations that apply within the state in which the award was granted.
These personal injury compensation claims may arise for a number of reasons, a common one being malpractice, or a medical compensation claim from the health care sector.
Other times though they are from things like whiplash injuries sustained due to a motor vehicle accident, a motorbike accident claim, slip and fall settlements, and other things like industrial injury claims. You never know when something bad may happen, and that's why every business carries liability insurance.
As mentioned, a common source of injury claims is the workplace. The standards governing safety regulations are tighter than they have ever been, and many companies find themselves falling foul of federal safety regulations when something goes wrong and they end up with a work accident claim on their hands.
Again, insurance will be in place to cover the expense of paying the victim. These payout can be very severe if the injury is likely to have long lasting effects. It is actually quite uncommon for these cash awards to be made as one lump sum straight away, and there are many variations on the type of award which is made.
There are many states which take a very protective view of structured settlements and refuse to award any lump sum payments. They take the position that if money is given to a recipient who is not a financial professional all in one go, then the likelihood is that they will fail to invest it wisely enough.
If this happens to a great enough extent, they could end up in need of specialist treatment for which they will be unable to foot the bill. This could involve the state in an unnecessary burden.
The most useful and helpful type of personal injury settlement is where an award is made involving regular periodic payments, such as through an annuity. This is what will suit the majority of claimants, as they will not have the financial know-how to handle their own lump sum payment. However, if the claimant feels confident enough they can apply to the court to do just that. Many people are familiar with Workman's Compensation Claims that usually result in a final lump sum payment like this. These lump sump injury claim payments will be awarded unless there is a special reason why they should not be.
Be very careful that you know all of the implications before you push for a personal injury settlement to be awarded via a one off payment. One of the most significant areas which could be affected is taxation, as the changing of a court award can open up new criteria under which the income is taxed.
If you have been awarded an injury type settlement, and take it as the court has awarded it, you will not be liable for income tax. Don't change anything without getting several opinions from people who know. The tax implications may strengthen the case for a structured or annuity type settlement instead.
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