Did You Win A Settlement? 3 Times You Should Take The Lump Sum Payment Instead
After enduring a lengthy lawsuit and winning a settlement, you might be asked to choose between collecting a single lump sum or structured monthly payments. Although monthly payments might seem like the responsible option, they aren't right for every situation. Here are three times you should take the lump sum payment instead:
1: You Need Cash Right Away
When you think about your settlement, it might be nice to imagine reliable, incoming monthly payments to help you to get by. Unfortunately, if you need money now, those monthly checks might not help you much. Insurance companies and bill collectors might not patiently wait for your payment, which could cause more problems down the road.
However, if you opt for the lump sum payment instead, you will have your money immediately. In addition to being able to take care of legal fees and personal expenses, you might also be able to relax and enjoy your life. As long as you can create a budget and stick to it, you can have the reliability of monthly payments, without someone else controlling your cash flow.
2: You Are Worried About Your Health
If you were the only member of your family listed in the settlement, those structured payments might only roll in as long as you are around. Unfortunately, if you have a terminal illness or you are elderly, you might never see the entirety of your settlement.
Fortunately, if you collect a lump sum instead, you can distribute your money just like you would any other asset. Instead of losing sleep over how your family might make ends meet without you, you can plan carefully for their financial future.
3: Your Situation Might Change
Because structured settlements have contingencies, they might only remain in effect as long as your situation stays the same. For example, if you won a disability lawsuit, you might only be able to collect payments as long as you are unable to work. Unfortunately, if you start making more money than you should, those payments might stop.
If you know that your situation might change, consider taking the lump sum payment instead. That way, if you ever decide to get married, go back to work, or move to another country, you won't have to worry about missing out on your settlement.
By carefully evaluating all of your settlement options, you can find the plan that will work best for your personal situation.