Managing Disability Related Expenses
Along with the emotional and physical challenges that lie ahead, your finances will be an ongoing concern. The cost of health care and other disability-related expenses is extremely high, and you will need to have a clear plan for managing your personal finances.
Many people who receive large settlements are faced with the choice of whether to take their awards in the form of a lump sum or a structured settlement over a period of time. This is an important decision that can have a substantial effect on you and your families long-term financial well-being.
Structured settlements can provide you a steady long-term income that is often tax-free and includes cost of living adjustments. Such a settlement can ensure financial security for persons who feel that a lump sum may “burn a whole in their pocket.”
Most people are not experienced in handling large sums of money. As a result, the money often is spent quickly, leaving little or nothing to cover the future needs of a seriously injured person. In order to create a more stable financial footing for the claimant, structured settlements were developed.
If you agree to a structured settlement, that means that at least part of your financial settlement will consist of future payments. The payments may be scheduled for any length of time – – even as long as your entire lifetime, and may consist of installment payments and/or future lump sums. Payments can be in fixed amounts or they can vary. The schedule is structured to meet your specific financial needs.
These arrangements may be voluntary, as in a pre-trial settlement, or they may be required by law or a court order, as in a settlement involving a minor. The defendant may agree to make future payments or it may purchase an annuity contract from a life insurance company to fund the payments. Annuity contracts have been the preferred way of funding because of their pricing and flexibility for settlement design. An alternative, however, is a trust fund which invests only in United States Treasury obligations. These trusts add the safety of an investment in obligations issued by the U.S. Government.
To learn more about the benefits of structured settlements, you can visit our Structured Settlement page or send your email request to Paul A. Hathaway, a specialist in structured financial settlements.
Lump Sum Settlements
On the other hand, a structured settlement may not be worth as much in the long-term as a well invested lump sum award, and payments may be in jeopardy if the disbursing party becomes insolvent.
A properly invested lump sum award can bring financial benefits above and beyond. the amount of the original settlement. Yet with all investments there is some degree of risk, so settlements should be invested conservatively, and with professional financial guidance. In addition, trusts can be set up to protect loss of Medicaid, SSI benefits, and other benefits through the expertise of the professionals associated with FSCIPCC.