A Personal Injury Lawyer in Beaver Dam WI can Help Clients Decide Between a Lump Sum and a Structured Settlement

by | Apr 21, 2016 | Lawyers

Many personal injury and accident lawsuits do not result in a trial because parties settle out of court. In most cases, the plaintiff is required to cease legal action in exchange for a payment from the defendant or their insurer. Most settlement payments are given in a lump sum, but some are paid over an extended period. Before accepting a settlement offer, the plaintiff should discuss their options with a Personal Injury Lawyer in Beaver Dam WI and an accountant. Below are the benefits and disadvantages of a structured settlement in a personal injury case.


Structured settlements give plaintiffs significant tax benefits because they are tax-free under current law. However, there are exceptions that can make some funds taxable, such as a punitive damages award or accrued interest. An attorney can tell clients more about settlement’s potential consequences. A structured settlement gives the plaintiff the reassurance of continued payments, but lump sum payments are more appropriate in personal injury actions involving minors.

Annuities are protected by state law, which guarantees that the insurer’s obligation is covered. Federal law does not officially give insurers the ability to declare bankruptcy, but most jurisdictions have a backup plan for insolvent insurers. Parties may dedicate settlement funds to cover future medical advancements, and a structured settlement can help parties reach an acceptable agreement when negotiations reach a sticking point.


Certain portions of a structured or lump sum settlement may be taxed, such as attorney’s fees, punitive damages, and those arising from emotional injury. Plaintiffs may not have much protection against economic downturns, and an annuity payment may then be insufficient to cover their needs. Structured settlements are cheaper for insurers than lump sum payments, and many insurers are reluctant to say how much they’d pay to purchase an annuity.

In most circumstances, an out-of-court settlement is a less costly, faster and less stressful choice than a court trial. A Personal Injury Lawyer in Beaver Dam WI can discuss the case’s facts with the client, and the team at Visit the website can help the person determine whether a lump sum or a structured settlement is the most appropriate option.

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