Have you ever heard of a structured settlement? After negotiations have concluded, and all the parties have agreed on the terms and settlement amount, there are two types of settlements available under Florida law: a lump-sum settlement and a structured settlement.
A lump-sum settlement is a single, large payout, and covers the full settlement amount. With a structured settlement, the victim, or the victim’s family, receives regular payments over time, according to the terms that all parties have agreed upon. There are benefits and drawbacks to each.
A lump-sum settlement can have certain benefits. With a lump-sum settlement, you have control over all of your money at one time. You have the option of using it however you want. You can use it to invest, to pay off debt, to buy a house, or to start a business. If you need the money right away, this may be a good option. Additionally, if the amount is not significantly large, there may be no point in having it awarded in the form of structured payments.
There are also potential downsides to a lump-sum settlement. For instance, there may be significant tax implications. While the money you are awarded in a settlement is typically not taxable, you will be required to pay taxes on the interest and dividends that you earn from that money. Before selecting a lump-sum settlement, you may want to talk to a tax professional.
Money management may also be a concern with a lump-sum settlement. If you suspect that you might be tempted to spend a large portion of your settlement on luxuries that you would not have purchased otherwise, you may want to consider a structured settlement. Similarly, if you know you will have ongoing expenses, such as medical care, a structured settlement can help ensure that you have the money when you need it.
A structured settlement can help you manage your money, and may save you money on taxes. If you have ongoing medical expenses, a structured settlement can be ideal. You should be aware, however, that once the terms of the structured settlement have been set, they cannot be changed. This remains true, even if your medical expenses or cost of living changes. The settlement terms will not change.
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