Things to Consider Before Deciding on a Structured Settlement

Article Written By: MarkBenedictYoung

These days many settlements are made in the structured format. In case you have been injured in a road accident, you might need money from your settlement immediately to pay your medical bills, and would rather have it now than wait for a large sum of money that may come to you later.

You should carefully weigh the advantages and disadvantages before opting for a structured settlement. If you need money because you have recurring medical expenses on account of your injury or require prolonged physical therapy in order to recuperate, then a structured settlement might be appropriate.

The payment in case of a structured settlement is usually made from interest accruing on a purchased annuity. A structured settlement is binding so once the agreement has been signed, you cannot change your mind about it. If you wish to modify the agreement later because of some unforeseen expenses, you need to go to an attorney to change the terms of your agreement. You cannot use your structured settlement to obtain a new loan either.

Some companies will purchase the rights to your structured settlement for a lump sum of cash, and they will usually do it for the investment potential. What they will pay will be the current day value of your settlement amount, but but not including the invested sum. Rules do vary in different states regarding structured settlements. The amount received from structured settlements is taxable in some states.

If you are going to see an attorney to assist you in negotiating a structured settlement, it's very important that you consider your situation and requirements carefully. Some things worth considering before you make a decision are:

What are the good and bad side of the program? Is the lawyer experienced enough in negotiating structured settlements? Given your own unique situation, is a structured settlement the most suitable or is it getting a lump sum of money? Will there be any tax benefit if you decide to go for a structured settlement? Will the money you need be adequate and on time to cover all your expenses? What about in case of future contingencies, and increased money requirements? Can you change the terms of the structured settlement later? Is it possible to change the program and opt for a lump sum payment at a later date?

It is wise to have a list of questions ready before you speak to a lawyer. The questions should be specific and relevant to your situation. Once you meet the lawyer, you can already gauge whether he/she is a good choice in handling your structured settlement. You should be certain that your lawyer has your best interest at heart, and if you are not sure, get a second opinion or consult with your own financial planner.

Make an informed decision only after you have had all your questions answered. This is an extremely important decision to take, one that will affect your future and that of your family. Enter into an agreement only if you are confident that you have made the right decision for yourself and your family.

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