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Structured Settlements, Auto Accidents, and You

Posted on May 13, 2010
Filed Under Autos, Insurance, Self Help | Leave a Comment

Agreeing to the dollar amount is the hardest part of automobile accident settlements, but it is far from the end of the process.  Once you and your insurance adjuster have agreed to the amount of money, you then need to agree to how you will receive that money.  There are several different options for receiving your money, but the two most popular are as a lump sum or as a structured settlement.

A structured settlement is where instead of receiving your money all at once, you receive it in a series of payments over time.  This can help budget your expenses better and there are several advantages to agreeing to this.

One of the biggest advantages of getting a structured settlement is that it helps you with tax avoidance.  If you get a lump sum, the entire amount that you received as pain and suffering could be counted into your yearly taxes.  So, if it was a substantial sum, you could be bumped up quite a few tax brackets and end up paying almost half of it to Uncle Sam in taxes.  Generally speaking, a structured settlement will allow you to spread this tax obligation out over several years, letting you pay a much smaller percentage of it in taxes.  However, every case is different so make sure you discuss this with a tax attorney.

Another advantage of having a structured settlement is that you can budget your expenses better.  If you received a very serious injury in as a result of your car accident, this can be used to make sure that you don’t use all your money and will always have some budgeted for ongoing medical bills.

Every case is different, and the way you receive your compensation will be different in every case as well.  Make sure you discuss the pros and cons of structured and lump sum settlements with your attorney.  For more information on the entire process of negotiation, visit the Auto Accident Settlement Center.

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