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Along with the emotional and
physical challenges that lie ahead, your finances will be an ongoing concern. The cost of
health care and other disability-related expenses is extremely high, and you will need to
have a clear plan for managing your personal finances.
Settlement Considerations
Many people who receive large settlements are faced with
the choice of whether to take their awards in the form of a lump sum or a structured
settlement over a period of time. This is an important decision that can have a
substantial effect on you and your families long-term financial well-being.
Structured settlements
can provide you a steady long-term income that is often tax-free and includes cost of
living adjustments. Such a settlement can ensure financial security for persons who feel
that a lump sum may "burn a whole in their pocket."
Most people are not experienced in handling large sums
of money. As a result, the money often is spent quickly, leaving little or nothing to
cover the future needs of a seriously injured person. In order to create a more stable
financial footing for the claimant, structured settlements were developed.
If you agree to a structured settlement, that means that
at least part of your financial settlement will consist of future payments. The payments
may be scheduled for any length of time - - even as long as your entire lifetime, and may
consist of installment payments and/or future lump sums. Payments can be in fixed amounts
or they can vary. The schedule is structured to meet your specific financial needs.
These arrangements may be voluntary, as in a pre-trial
settlement, or they may be required by law or a court order, as in a settlement involving
a minor. The defendant may agree to make future payments or it may purchase an annuity
contract from a life insurance company to fund the payments. Annuity contracts have been
the preferred way of funding because of their pricing and flexibility for settlement
design. An alternative, however, is a trust fund which invests only in United States
Treasury obligations. These trusts add the safety of an investment in obligations issued
by the U.S. Government.
To learn more about the benefits of structured
settlements, you can visit our Structured Settlement
page
or send your email request to
Paul A. Hathaway,
a specialist in structured financial settlements.
Lump Sum Settlements
On the other hand, a structured settlement may not be
worth as much in the long-term as a well invested lump sum award, and payments may be in
jeopardy if the disbursing party becomes insolvent.
A properly invested lump sum award can bring financial
benefits above and beyond. the amount of the original settlement. Yet with all investments
there is some degree of risk, so settlements should be invested conservatively, and with
professional financial guidance. In addition, trusts can be set up to protect loss of
Medicaid, SSI benefits, and other benefits through the expertise of the professionals
associated with SCI-Law.
For additional information regarding the management of
disability related expenses, send your request to
ron@sci-law.net
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© 2006 - 2011, Spinal Cord Injury Law. Last
Edit 8/26/2011
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