Assessing Your Lawsuit Payout Options

If you’ve been the plaintiff in a personal injury, wrongful death, medical malpractice, or another type of liability claim, there are multiple possible outcomes depending on the circumstances of your case. Typically, a lawsuit will take one of two paths: 
  1. The case goes to trial and must be ruled upon by a judge.
  2. The case settles out of court after negotiations between the plaintiff and the defendant's legal counsel. 1

Depending on the specifics of a claim, either path can potentially lead to financial compensation for the injured party. Whether a case settles inside or outside of court, a winning defendant will usually have two lawsuit payout options:

  1. In the form of a one-time lump sum payment.
  2. In the form of a structured settlement. 1

Weighing the Options: Lump Sum vs. Structured Settlement

Once you’ve successfully been awarded damages for your case, you’ll have a decision to make about the different lawsuit payout options through which you will receive your money. While there is never one single “right” choice for how you receive your funds, there are certain considerations, such as financial longevity, that should be taken into account before deciding between a lump sum or structured settlement.

Financial Longevity

When receiving compensation from a lawsuit, you typically have the choice between a lump sum and a structured settlement. While a single lump sum can be helpful immediately following your case, many people choose structured settlements because they guarantee money for a designated amount of time. This gives the recipient the ability to actively budget according to their payment schedule and may offer an easier path to long-term financial stability.2

Structured Settlements' Freedom of Choice

Unlike lump sums, a structured settlement  can provide the recipient with a number of different lawsuit payout options. In most cases, there are discussions to determine the best way to structure the settlement to maximize its benefit to the claimant’s life. This includes selecting a specific start and end date for the payments. A wide range of factors such as medical bills, rehabilitation, or personal property damage will go into the decision.3

Structured settlements can be either life-contingent  or term-certain.

  • Life-Contingent structured settlements are designed to last only as long as the recipient lives. Once the recipient passes away, the payments will cease. However, in special cases, a spouse may be able to continue receiving life-contingent payments after their significant other has died.3
  • Term-Certain settlements are set to last for a specific amount of time and will not end even if the recipient passes away. In such a case, the recipient’s beneficiaries would continue receiving payments until the specified length of time has ended. On the other hand, if the recipient outlives their term-certain structured settlement, they will need to re-adjust to life without receiving settlement payments.3

Scheduling Settlement Payments

In addition to choosing the start and end dates of your compensation, most settlements will allow you to designate the frequency of your payments. Typically, choices will include:

Decreasing Payments

In some cases, a recipient may wish to begin their settlement with high payments, but gradually decrease them as they recover financially from things like medical bills or property damage.2

Increasing Payments

As opposed to decreasing payments, increasing settlement compensation plans start with lower amounts and increase over time. The settlement will build interest while being deferred.2

Settlements with Lump Sums

In some cases, recipients will decide that they want to receive their payments in the form of a structured settlement, but could stand to benefit from having larger payments at one time or another. In this circumstance, they will typically have three options: an initial lump sum, a final lump sum, or periodic lump sums. In the case of initial and final lump sum settlements, recipients can designate that they will receive a larger-than-usual either at the beginning or end of their payment stream. Periodic lump sums, however, involve scheduling payments which are higher than usual and occur at a preset interval.2

Selling Your Structured Settlement Payments

Despite having a wide range of options when you initially set up your payment amount and frequency, once the terms are set, they are often final. Understanding that circumstances do change, you may find that what was once enough money to make ends meet is not quite enough now. 

If this pertains to you, give J.G. Wentworth a call. We specialize in buying future settlement payments in exchange for lump sums of cash, giving people the financial breathing room they need to accomplish their goals. Whether you have to wait long periods between payments or not, it is ultimately your money. At J.G. Wentworth, we help you get the cash you need, whenever you need it. Contact us today to learn more!

The above is some basic information on the topics, and is not a complete guide. J.G. Wentworth  is a purchaser of assets and does not provide legal, tax, or financial advice. Please contact independent professionals for legal, tax and/or financial advice.

1. http://www.alllaw.com/articles/nolo/personal-injury/how-lawyer-settles-lawsuit.html

2. https://www.nolo.com/legal-encyclopedia/what-is-structured-settlement-should-you-choose-one.html

3. https://www.lexisnexis.com/legalnewsroom/workers-compensation/b/workers-compensation-law-blog/archive/2010/06/07/structured-settlements-101.aspx 

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