Lump-sum settlements under Florida law are what a victim receives when he or she agrees to resolve a personal injury or wrongful death lawsuit with a single, large payout. This type of settlement occurs after negotiations have concluded, and all parties have agreed on the terms and the settlement amount. The single payment covers the full settlement amount.
Typically, the check comes directly from the insurance company. In cases where the defendant has no insurance, it may come directly from him or her.
Alternatives to a Lump-Sum Settlement
The alternative to a lump-sum settlement under FL § 768.78 is a structured settlement. With a structured settlement, the victim—or his or her family—receive regular payments over time according to terms that all parties have agreed upon.
The downside of a structured settlement is that once the terms have been set, they cannot be changed, even if your needs change and you need to cover medical expenses—even those associated with your injuries from the accident—or an increased cost of living.
That said, a structured settlement can be ideal if you know you will have ongoing medical expenses and believe that the regular payments will help you manage your money.
A structured settlement may also save you money on your taxes. Because you have to pay money on the interest and dividends you earn from your settlement, with a structured settlement, you have less money sitting in the bank and therefore, generally, a lower tax obligation.
Benefits of a Lump-Sum Settlement
Many people prefer to have a lump sum settlement in a personal injury case because it means that they have complete control over all of their money at one time. A lump sum settlement can also give the victim the option of investing the money the way he or she wants or paying off debts immediately. If you plan to buy a house with the settlement proceeds to start a business, you may need the money right away.
In addition, if the money isn’t of a significantly large amount, there may be no point in having it awarded in the form of structured payments.
Important Considerations Regarding Lump-Sum Settlements Under Florida Law
There are some important factors you should consider if you are debating between a structured settlement or a lump sum settlement for your Florida personal injury or wrongful death case.
While the money you are awarded in a personal injury settlement is typically not taxable according to the Internal Revenue Service (IRS), you will be required to pay taxes on interests and dividends you earn on the money from your settlement. A tax professional can explain how a lump sum settlement or a structured settlement can impact your taxes. A tax professional will be able to answer questions about the tax ramifications of one form of payment over another.
Your Money Management Abilities
Everyone’s money management abilities are different. If you suspect that you might be tempted to spend large portions of your settlement on luxuries that you would not have purchased otherwise, you may want to consider a structured settlement. This is also true if you know that you will have ongoing expenses, such as medical treatments. A structured settlement will help ensure you have the money when you need it.
That said, if you do have a good track record of managing money and want to consult with a financial advisor or manager about investing the settlement money, a lump sum may work you.
Choosing the Right Settlement
If you know that you need the money right away to reimburse you for out-of-pocket costs, replace your vehicle or pay off debt, a lump sum settlement could be ideal.
Whether a lump sum settlement under Florida law is right for your case will depend entirely on you and your unique situation.
Understanding structured and lump sum settlements and which one is the best choice for you can be confusing. There are many factors that can impact which form of settlement is best for you, from the tax ramifications to your personal needs and spending habits.
Contact Chalik & Chalik Injury Lawyers Today
If you have a pending personal injury case or wrongful death lawsuit, the team at Chalik & Chalik Injury Lawyers are here to offer you guidance about negotiating settlement terms and pursuing compensation. You do not have to worry about structuring the settlement on your own. Let us calculate the value of your damages and pursue a settlement on your behalf. Call us today at (855) 529-0269 for a free, no-obligation consultation.
For a free legal consultation, call (855) 529-0269