One difference is obvious. Someone that has completed a successful personal injury claim could select either of those options. The choice of a structured settlement would ensure delivery of a series of small payments over time. The choice of a lump sum payment would cause your bank account to grow in size substantially, and to do so within a short span of time.
How would a plaintiff be able to feel confident about the repeated delivery of the smaller payments?
The defendant would need to purchase an annuity from an insurance company (usually a life insurance company). That same company then would issue the smaller payments over the established period of time?
Who would determine the length of time over which the payment should be made?
A personal injury lawyer in Sherwood Park knows that any plaintiff that has chosen to receive a structured settlement has the right to select the amount of time over which the payments would be made, and also the size of each payment.
So, there is no standard size for the payments that get sent to the plaintiff?
No, plaintiffs are allowed to determine the size of each payment. In other words, not all payments must be the same size. Some plaintiffs opt for receiving a large payment as the first one, and then smaller ones later. On the other hand, there are plaintiffs that have chosen to delay their payments until the time of their retirement.
What could happen if a plaintiff were to realize that he or she would like more immediate access to a larger sum of money?
In that situation, the person with the structured settlement could contact one of the companies that earn money by purchasing such settlements. Each of such company agrees to buy rights to the annuity, and to provide the seller with a given amount of cash. This transaction would cause the owner of the settlement to give some of the awarded money to the buyer (the new owner of the annuity).
In light of the fact that changes in future plans could result in a loss of some money, why would someone opt for the structured settlement?
When a large amount of money sits in a bank account, it earns interest. The government places a tax on the interest. If the money were used to buy stocks, then the government would place a tax on any dividends.
Furthermore, no everyone feels comfortable handling a large amount of money. Some people feel tempted to spend it. Others find that friends and relatives keep asking to borrow a share of their savings.
It is difficult for one person to hand out loans, and do it safely. Lending institutions usually ask to see some form of collateral.