There may be many different reasons why you could be awarded a settlement. You might receive one from an insurance company, or win a case in a court of law because you've been discriminated against, or injured, as an example. Whatever it may be, your sum of money can be received and awarded to you in a number of different ways.
Commonly, people think your sum is awarded in one large payment. This is often a smart way to take your settlement, if it is small, like $10,000 or less. But for much larger sums, there are many different alternatives you should at least consider.
Oftentimes it is not wise to take a large chunk of money all at once. Taxes on large sums of money may drive you crazy. But more importantly, most people will mismanage large chunks of money if they've never had them before.
These are just two of many reasons why you should consider an alternative to taking your settlement all in one sum. A structured settlement is an alternative to that.
With a structured settlement, your offer the option of being paid your settlement in installments, over a certain length of time. You can even create the payments to cover you the rest of your life, if your damage will affect you for the rest of your life. This way you know you will have a guaranteed source of income every month.
Not all structured settlements have to be divided equally into payments. For example, you can choose to receive a certain portion of your settlement up front, and then set the rest up to be paid in installments. This is ideal for people who have a large debt that they want to take care of upfront, and still have a monthly payment received from their settlement.
Inflation is taken a consideration when structured settlements are set up. This way if you're receiving payments in 10 years, they will have the same buying power as they do currently.
To sum it up, these are your options that are involved when being awarded a large sum and setting up a structured settlement. Compare this to receiving your money all at once. It might just be more wise for you to set up a structured settlement.
