Personal Injury Settlements

Written by Michael Federico
Bookmark and Share

When a person receives an injury settlement, it is often handled through an insurance company. This is due to the fact that the majority of injury cases do not take place between two individuals. The injured party's place of business or another company or corporation are often involved.

An insurance company will most likely set up a structured settlement. The total amount of money is broken up into scheduled payments. The details of structured settlements are hammered out by lawyers and established either in court or before a case ever goes to court. Once the structure of a settlement is established, the insurance company can in no way alter it. This protects the recipient, but it can also tie him down, because he cannot receive more of the total settlement than the payments allow.

Receiving a Lump Sum for Personal Injury Settlements

If a person finds that his set personal injury payments are not helping him enough financially, he can seek out a settlement broker. Brokers, using certain criteria, can come up with rates they are willing to pay for personal injury payments. This will allow a person to receive the lump sum they didn't get from the initial settlement.

A person does not have to sell all of his future payments. He can, in most cases, keep the majority of them. Also, the IRS has ruled that if the initial settlement enjoys tax deferrals or breaks on growth, the lump sum received in exchange for payments can remain tax-free. Selling personal injury payments can help a person's financial status quickly. However, if an injury will keep a person from working, it is important that he holds on to as many future payments as possible to ensure that he will be taken care of down the road.

Bookmark and Share