Q: What is the advantage of accepting a lump sum settlement over installments? Isn't the amount the same in the end?
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A: You asked an excellent question. The amount that you will be paid or that you will receive will depend on the terms and payments. You should discuss this with your attorney or you may want to hire an attorney to review the settlement. It may be beneficial to have the payments over a period of time in the form of an annuity. Make an informed decision before you sign off on the payment arrangements. Good luck.
A: Not necessarily. If you mean you have been offered a structured settlement, there are certain benefits to clients that might increase the overall amount over time versus taking a settlement in a lump sum: 1) a structured settlement usually pays an extra amount for interest to compensate for the time value of money; 2) there might be tax savings in accepting the settlement as a structure; and 3) the structure also provides more stability to help ensure you don't run out money. Many clients are not used to the rigors of managing a large amount of money at once and would be better off getting regular payments over a longer time period. You should consult both with your lawyer and with a structured settlement expert.
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