Whenever the plaintiff in a personal injury case has won a large reward, he/she can choose to receive the rewarded funds as either a lump sum payment or an arrangement known as a structured settlement.
What are the key characteristics of a structured settlement?
It functions in a manner that copies the payment of funds from an annuity. The plaintiff receives the rewarded money over a given period of time. The plaintiff has the right to decide the length of the time span, the span during which he/she wants to receive payments. Depending on the jurisdiction where the personal injury case had proceeded to the litigation stage, there could be a minimum number of years in that selected time span.
A personal injury lawyer in Barrie can help with completion of the necessary documents. This arrangement generally proves best, if an injured plaintiff expects to undergo rehabilitation or some other form of treatment in the coming months or years. It guarantees the plaintiff’s ability to cover the costs of that rehabilitation or other treatment.
Advantages of chosen of structured settlement
There is no tax on the funds received by the former plaintiff. There could be a tax on interest that had accrued, during time when the rewarded money was available, but was not being used.
This arrangement increases the chances that the recipient of the rewarded funds will have at least some of that same money available to him/her for an extended period of time. Sometimes, plaintiffs that have chosen to accept a lump sum payment use up a large part of that lump sum before receiving a bill for rehabilitation services, or for some other form of treatment.
Drawbacks to selection of structured settlement
The insurance company calculates the size for each payment. When carrying out its calculations, the insurance company relies on its own estimate of the accident victim’s future costs. That estimate might be low; therefore, the calculated payment could be lower than the actual damages.
A plan that has taken future costs into consideration might not guarantee the availability of money for more immediate needs, such as changes in the home, in order to accommodate a wheelchair. That is why any accident victim should work closely with a personal injury attorney. An attorney’s experience should help with selection of the best plan.
The plaintiff’s claim remains open and active with the insurance company. A personal injury lawyer could offer further details, with respect to that particular drawback. Such lawyers understand exactly what it means to have any sort of claim remaining in an open and active state.
The recipient of the reward does not have full control over how the received funds can be used.