How Are Personal Injury Settlements Paid Out?
A vast majority of personal injury claims filed in New York are settled out of court through negotiation. Once a settlement is reached, the compensation can be paid out in two ways – a lump sum settlement or a structured settlement.
A lump-sum settlement – as the term indicates – is an arrangement wherein you will be paid the entire amount in a single payment. A structured settlement – on the other hand – is an arrangement wherein you will receive a series of payments over a period of time.
Which option is better for you? This decision is ultimately up to you with the guidance of your winning New York personal injury lawyer.
Lump-Sum Settlement vs. Structured Settlement – What You Need to Know
A lump sum settlement might be the right option for you if you have immediate expenses to be met or if you might not be able to work for a while and do not have any other income source to rely on.
Moreover, if the settlement amount is only sufficient to cover your immediate expenses, it might not be worth your time and effort to negotiate a structured settlement with the insurance company.
On the other hand, if you have ongoing expenses that you need to meet and if you want to earmark a portion of your settlement for unforeseeable expenses in the future, a structured settlement might be the right option for you.
Deciding the Terms of a Structured Settlement
If you think that a structured settlement might be the right option for you, you can consult with your personal injury lawyer to decide the terms of the settlement. These might include:
- When you want to start receiving the payments
- How long you want to receive the payments
- Frequency of payments (monthly, quarterly, biannual, or annual)
- Amount of payments
Depending on your financial needs, you can also opt to receive a portion of your settlement right away and then receive a series of payments over a period of time. Or you can receive a series of payments for a period of time and then receive a large payment at the end.
Similarly, you can choose whether you want your payments to gradually increase or decrease over time. For instance, if you have school-going children, it might be a good idea for you to opt for increasing payments. As your children’s educational expenses increase, so will your payments, which can make it easier for you to make ends meet.
It should be noted that regardless of how your settlement is paid out, you are not required to pay taxes on it. However, if you are awarded punitive damages in addition to compensatory damages, you have to pay taxes on the punitive damages. While punitive damages are rare, this is an important distinction when it comes to tax liability!
Let the Best Personal Injury Lawyers in New York Negotiate a Settlement For You!
At the Law Offices of Michael S. Lamonsoff, we have over 100 years of combined experience in negotiating and litigating personal injury claims. Led by award-winning civil litigator Michael S. Lamonsoff, our legal team can assist you at every step of the process, recover the maximum possible compensation, and negotiate the details of your settlement payout to make sure it meets your financial needs.
To talk to an experienced New York personal injury lawyer from our firm, call us today at 212-962-1020 or contact us online and schedule a free consultation today.