When you are hurt in an accident involving a semi-truck, you might decide to seek compensation for your injuries. Seeking compensation for a semi-truck accident means filing a civil lawsuit; however, many cases are settled before you end up having to go through a trial. Many truck accident cases are handled through structured settlements. If you're offered an initial settlement offer or a subsequent offer that involves a structured settlement, you should consider the pros and cons of this type of arrangement.
What are the settlement options available?
There are two types of settlement options available -- lump sum and structured. In a lump-sum settlement, you would get the full settlement all at once. In a structured settlement, you would get regularly occurring payments based on the structure schedule of the settlement. These payments are usually made through an annuity that is set up by the insurer.
Why is a structured settlement an option to consider?
A structured settlement can be a good option because you aren't likely going to be responsible for the taxes that would come with a lump-sum settlement. Annuity funds are tax-free as long as you don't control the annuity funds. Additionally, you have the benefit of knowing that you will get payments based on the schedule, which can help you to budget the settlement.
What is the downside to a structured settlement?
There are instances in which the IRS might not recognize the elements necessary for the tax break. Additionally, funding might become an issue for some annuities.
Generally, structured settlements are a quick alternative to a trial. It is critical that you consider all aspects of the structured settlement before you agree to resolve your claim for compensation in that manner.
Source: FindLaw, "Structured Settlements: Pros and Cons," accessed Dec. 30, 2015