You’ve finally won your case, and now you have to decide which compensation method to use. Without a compelling reason choosing one over the other can be mentally draining. If you have hit a dead-end trying to choose the alternatives, this is the article for you.
Read along as this article will divulge five reasons to opt for a structured settlement.
1. Tax-Free
Most structured settlements are nontaxable though there are some scenarios where it’s taxable. This is dependent on the purpose of the amount; is it to compensate you or punish you for an offense? If the money is intended to compensate you for injuries or other damages, it’s nontaxable, while it’s taxable if you’re paying a fine or penalty.
You can also look at it this way: when you take a lump sum and invest it, all of the earnings are taxed. When you take structured settlements, the rest of your money will be invested by the financial entity, which will accrue interest. The money you’ll be paid at the agreed period won’t be taxed, although it has accrued interest.
2. Offers Security for the Future
If you are unsure if you can manage a lump sum settlement, it’s advisable to opt for a structured settlement. That way, you won’t blow up the money then end up struggling financially with deep regrets. Opting for structured settlement gives you a kind of security in that you’ll have a constant source of income to sort out your bills.
Money always finds a way to pile up expenses; if you want a secured future, structured payments would be the way to go.
3. Flexibility of the payment
One of the best benefits of a structured settlement is the flexibility of the design of the payments. You can decide to either get the settlements monthly, quarterly, bi-annually or annuities. More so, you can determine whether you want the payments to increase as time goes by or decrease.
To put this into perspective, this month you can receive $1000, the next $1200 and the other one $1400 or vice versa. Once you agree on how the settlement payments will be made, you can’t change.
4. To Avoid Borrowers
Once your friends and relatives hear that you have received a lump sum amount of money, they will start soliciting loans and funds. More so, some will come up with “big business ideas” that they are sure will make you even richer. If you know such things will happen, consider structured settlements.
5. To Avoid Making Risky Investments
When you have a huge amount of money, you’ll get enticed to invest to make even more. One risky investment can take all your money down the drain. Contact Rightway Funding to get more advice on structured settlements.
Make the Right Decision and Enjoy the Benefits of Structured Settlement
Consult with tax professionals and financial experts before making the decision. Either way, structured settlement offers good trade-offs compared to lump-sum settlements.
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