So, after a long and grueling battle, you’ve finally won your court case. Congratulations! If you’re like most plaintiffs, you’ll be tempted to spend your winnings right away. From legal fees to medical bills to missed days at work, you may need the cash—not to mention the temptation to celebrate by splurging. Not so fast! Before you spend your hard-earned cash, consider a better alternative: structured settlements. Here’s what you should know about this convenient option.
What Are Structured Settlements?
First off, even if you aren’t sure what structured settlements are, you may know of them by another name. In some cases, they may be called “structured settlement annuities,” and some people confuse them with the term “annuity” in general. However, there are differences between annuity vs. structured settlements.
In a court of law, structured settlements are used as an alternative to lump-sum payments. Instead of a single payment, the plaintiff will receive a series of payments for a set period.
This is in contrast to annuities, which are available outside a court of law. Someone set to receive a large sum of money—via lottery or casino winnings, for example—can opt for an annuity to get a series of payments over the long term.
Why Choose a Structured Settlement?
The decision between a lump sum or a structured payout depends on your own financial situation. There’s no right or wrong answer, so it comes down to your own needs.
If you’re struggling with immediate medical expenses that might cost you thousands or even hundreds of thousands, for example, a lump-sum payment might be the better option.
However, if you don’t immediately need a huge amount of cash, a structured settlement might be preferable for several reasons:
- Structured settlements allow you to establish a long-term income
- Structured settlements incur fewer taxations
- Structured settlements with cost-of-living clauses get money to balance out inflation
- Structured settlements won’t affect eligibility for public assistance programs like Medicaid
In addition, you can turn a structured settlement into a lump sum payment at any time, meaning that you can always change your mind
How Do You Set Up a Structured Settlement?
Setting up a structured settlement isn’t as complicated as you might think. In fact, the process can be relatively straightforward, as long as you choose a reputable structured settlement issuer to work with.
During the structured settlement process, you are essentially selling your lump-sum payment in exchange for a series of payments. You’ll need to get quotes from multiple sources to find the best terms, just as you would in any other financial transaction. Be sure to discuss your future financial goals, as well as your preferences in terms of how often and how long you want to receive payments!
Again, it’s crucial to make sure you partner with a company you can trust to disperse your money as planned. For more info on a reliable structured settlement company, click here.
Contact a Pro for Structured Settlement Advice
At the end of the day, the choice between lump-sum payments or structured settlements can be personal. However, structured settlements offer a number of great benefits, including the fact that they turn your winnings into reliable long-term payments. To learn more about your specific options, be sure to reach out to a reputable structured settlement company!
Want more of the essential info you need to know? Be sure to check out our other guides for additional insights.