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Structured Settlement Vs Lump Sum

Structured Settlement Vs Lump Sum

When a civil lawsuit is settled, the winning party may receive a structured settlement or lump sum payment. The choice is left up to the plaintiff and defendant to agree upon, but most people prefer a structured settlement. There are a lot of benefits to receiving a structured settlement, but there are also a lot of benefits associated with obtaining one lump sum. You will have to weigh the pros and cons to determine whether or not a structured settlement is right for you.

One thing that people like most about getting a structured settlement is that they do not have to worry about losing a large amount of their awarded sum to taxes. Large sums are taxed to the maximum amount, which can ultimately lead to you losing cash. No one wants to lose extra money just for the sake of receiving it all at one time. However, having a large sum of money at your disposal has its own unique list of benefits.

Structured Settlement vs Lump Sum: The Ultimate Choice

Whether you should choose a structured settlement or a lump sum depends on your personal preferences and needs. Each payment method has its own perks and benefits to provide to you, but the ultimate choice is your decision. Structured settlements are a popular option simply due to the fact that they are not taxed. However, you will only receive an agreed upon amount on a monthly basis. The length of time you will receive payments depends on the overall amount and the amount of the payments.

Weighing the Pros and Cons of Structured Settlements and Lump Sum Payments

Structured settlements can end up providing you with reasonable monthly payments for the rest of your life. When you receive a lump sum, it is very hard not to avoid the temptation of spending it at a rapid rate. A lump sum can allow you to pay for a house or call in full, which can ultimately save you money on the purchase. However, managing a large lump sum payment can be difficult.

Which is Right for You?

If you want to purchase a home in full without the worry of future payments, you should consider getting a lump sum amount awarded to you. You can usually get the courts to agree to a lump sum if the amount is not too large. You should be aware of the fact that you will have to pay taxes on the lump sum. The larger the lump sum amount is, the more you can expect to pay in taxes. If you want to put a down payment on a home, a structured settlement may be the better choice for you. Instead of worrying about affording your monthly mortgage payment, you are guaranteed to have the amount because your structured settlement payment will be dispersed to you.

It should be noted that this is just an example to demonstrate how you might use your civil settlement money. The ultimate choice is yours to make for your own future.

Structured Settlement Vs Lump Sum
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