When a person with a spinal cord injury wins a personal injury lawsuit, they will receive financial compensation for their injuries. Financial compensation for a spinal cord injury case typically includes money for medical bills, lost wages, and pain and suffering. After winning a lawsuit, the plaintiff has two options when it comes to how they will receive their money: through a lump-sum settlement, or through a structured settlement.
Lump-sum settlements are one-time financial rewards where the person is awarded all of their compensation at once; for example, if someone wins $2 million in a personal injury case, they can receive all $2 million at once through a lump-sum award. Structured settlements, on the other hand, function differently than lump-sum settlements. There are several advantages and drawbacks to structured settlements. Read below to learn if a structured settlement is right for you.
What is a structured settlement?
A structured settlement is when a plaintiff is awarded financial compensation through regular, ongoing payments, rather than through a one-time payment. Structured settlements can be distributed over two years, five years, ten years, or even over a person’s entire lifetime. Structured settlements can bring many advantages to a plaintiff compared to lump-sum settlements.
What are the advantages of a structured settlement in a spinal cord injury case?
There are many advantages to choosing a structured settlement over a lump-sum settlement, especially when it comes to a spinal cord injury case. First, plaintiffs with spinal cord injuries receive regular, on-going payments through a structured settlement, which can help ensure their money does not deplete too quickly. Through spread-out, smaller payments, structured settlements can help guarantee that a plaintiff uses their money for their lifetime spinal cord injury costs, rather than spending all of their money right away. The second advantage of structured settlements is that they are tax-free. A third advantage of structured settlements is that they are more difficult for non-recipients to access, meaning your settlement money is protected from any ex-spouses or family members trying to access your funds.
Is a structured settlement right for me?
There are also a few drawbacks to structured settlements. The first major drawback is that structured settlements may not help those who need a significant amount of money upfront to pay for medical bills and home modification equipment. The ongoing, spread-out payments that come with structured settlements prevent plaintiffs from having a large sum of money at once to pay off their bills. Another disadvantage to structured settlements is that they are set at a fixed interest rate for as long as the payments are made; since, in 2020, interest rates are low, Another drawback is that structured settlements, if large enough, can affect someone’s eligibility for Medicaid and Social Security benefits. Because settlement money is counted as income, if someone’s structured settlement payments are too high, they will become ineligible for Medicaid and Social Security benefits.
Because of these drawbacks, many disability planners and disability lawyers recommend a hybrid approach to receiving settlement money: this happens when the settlement payments are larger at the beginning and become smaller throughout time. This hybrid approach to receiving settlement money allows plaintiffs to pay off their medical bills and buy any needed equipment early on post-injury, while at the same time, guaranteeing that they still have money for the future. Disability planners also recommend setting up a first-party trust for any settlement payments so the plaintiff can maintain their eligibility for healthcare and cash benefits.
A structured settlement may be right for your unique situation. To learn about the best settlement payment method for you, and to learn how to maintain eligibility for public benefits even after receiving a settlement payment, contact The Spinal Cord Injury Law Firm Today. Our lawyers are experts in disability planning, and we can help you plan for your future and maintain financial stability. Contact us today at 1-877-SCI-FIRM or kelley@spinalcordinjurylawyers.com to set up a free legal consultation.
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