There are pros and cons to a structured settlement in a car crash case. Here, we explain them to help you decide if this agreement is right for you.

A Structured Settlement May or May Not Be the Right Choice for You in Your Auto Crash Claim

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Most victims of a car accident receive their settlements in a lump sum payment. However, in some cases, it can make sense to enter into a structured settlement where the payments are paid over a period of time or for the person’s lifetime. Here, we share some of the benefits and drawbacks of these agreements.

Pros of a Structured Settlement

In Washington State, a structured settlement must meet the requirements of the Structured Settlement Protection Act, which requires that the agreement be in writing and contain certain provisions. They are often entered into if the victim is a minor or suffered catastrophic injuries. Some of the benefits of these agreements include:

  • If you owe taxes on any part of your award, such as punitive damages, you can spread your tax liability over time by using a structured settlement.
  • You will have the certainty of your payments over a fixed period of time at an amount agreed to in your agreement. When you cannot work due to your injuries, this can ensure that you have sufficient income to pay your monthly expenses in the future.
  • If you are worried that you would spend a lump sum payment too quickly or on unrelated expenses, receiving your payments over time can help avoid this problem.

Drawbacks of Structured Settlements

Like just about everything in life, there is a downside to entering into a structured settlement. Here are some of the negative considerations:

  • If the amount of your settlement is not large, your periodic payment may not be substantial enough to benefit you.
  • Once you enter into a structured settlement, it is a binding agreement between you and the insurance company. You lose flexibility in when you will have access to your money when you receive it in a structured settlement rather than a lump sum settlement.
  • You may receive more return on your money if you receive your payment in a lump sum and invest it yourself.

Do you have questions about whether a structured settlement is right for you or other questions about filing a car accident claim? Schedule a free consultation with our experienced car accident attorneys. Call our office to schedule your appointment.

Category: Car Accidents


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