Personal injury cases can drag on for months or even years because they are often complex, and compensating the victim fairly or relieving the accused party of negligence in a case is usually lengthy. However, one of the most common ways the parties deal with personal injury cases is through settlements.

Settlements are a way of reaching a financial arrangement between two parties. Settlements are of two types. One can be a financial settlement that pays the victim a lump sum of money upfront. Another type of settlement is a structured settlement where the responsible party for injury pays the victim money over a specified period.

Structured settlements are getting more and more popular recently. Let’s take a look at the benefits and limitations of structured settlements here.

Benefits of Structured Settlements

Structured settlements have multiple benefits.

Reliable Source of Income Over a Time Period

Structured settlements provide the victim with a reliable source of income over a period. This could be very beneficial if the injury sustained by the victim is severe and prevents them from working or results in them losing their job or wages. Structured settlements can provide financial stability to victims in times like these.

It’s also beneficial for people who suffer from long-term consequences from injuries, like disabilities, loss of movement in certain muscles or parts of the body, and more.

Protects Victims from Financial Mismanagement

Not every person is financially responsible. A lot of people tend to mismanage their finances when they receive a large sum of money together. This could result in problems later on when they require money to maintain their lifestyle or for medical treatments, etc. Financial abuse can also come from close friends or relatives, where the victim is exploited.

Structured settlements help ensure the victim doesn’t mismanage their finances because they don’t get a lump sum together.

Tax Benefits

Structured settlements also provide victims with tax benefits. If victims receive a lump sum of money, it usually qualifies in a certain tax bracket, and the victim must pay tax on that sum. However, structured settlements mean the victim will be getting small sums of money regularly. These may not accumulate and come under a tax bracket, exempting them from paying tax on that amount.

Limitations of Structured Settlements

Where there are a lot of benefits, structured settlements also have a fair share of limitations. These include:

Inflexibility

Structured settlements are not flexible. Once the terms of the settlement are set, they can’t be changed even if the circumstances change. For example, the victim may face an emergency where they require all of the money upfront. However, if they have signed a structured settlement, they are liable to receive it in regular payments only.

Not Suitable for All Victims

Structured settlements may be good for some victims, but they are definitely not suitable for all victims. Victims who are terminally ill or have a short life expectancy may not be able to benefit from structured settlements. In these cases, a lump sum payment helps provide the victim with financial security. Similarly, if the victim needs a large sum of money for their medical treatment for the injury, it’s pointless to sign a structured settlement because they need the money upfront.

Personal injury cases can be complex and reaching the right settlement with the other parties is not easy either. It’s best to work with personal injury lawyers when it comes to dealing with these cases and trying to reach any type of settlement. If you’re looking for an experienced personal injury lawyer in Mississauga, Nanda & Associate Lawyers can help you.

It is one of the leading law firms in Canada and has a team of experienced personal injury lawyers who have years of experience and can handle all sorts of personal injury cases and help their clients get fair compensation. It also has immigration lawyers, business lawyers, commercial real estate lawyers, and civil litigation lawyers on board and offers services in Toronto and Mississauga.

Get in touch with their team now, or book a meeting today.

About the Author

Jason Rafael is a personal injury lawyer in Mississauga, Ontario. He has been practicing law for over twelve years and has been associated with Nanda & Associate Lawyers for over five years. He specializes in reaching settlements for his clients in a short timeframe.