Making the Most of Your Structured Settlement

Most people will never receive a structured settlement. And most of this group isn’t even totally sure what a structured settlement is. If you are a little murky on the subject yourself, structured settlements are actually a pretty simple concept. Let’s say you sue someone, and your case is very strong. Rather than slog through the cost, time, and embarrassment of a courtroom trial, the individual or entity you’ve sued might opt to settle instead. In a settlement, your lawyers will meet with their lawyers, and together you’ll agree upon an amount of money which, when paid to you, is enough to make matters right and cause you to drop the charges.


But that settlement money doesn’t always get delivered as a single lump sum. Lump sums are sometimes looked at as problematic, for the same reason that lottery winnings are viewed as problematic. Commonly awarded to people who are not used to having money, the tax burden alone may be more than the average settlement winner can handle. So structured settlements were introduced. Rather than dumping a single sum in the winner’s bank account, the settlement is divvied out in small monthly portions.


Ideally, this gives the settlement winner a little extra cushion in life. Paying the rent is easier, the bills get covered, things like that. But many people who receive structured settlements find that they don’t ultimately like them. There are many reasons. One of the most common is that people who have just been through a lawsuit are often not in the best health, mentally or physically. Remember, people who sue do so because they’ve taken some kind of hit: emotionally, financially, physically, etc. A stipend of a few hundred dollars (or more) every month might not be able to make ends meet. This is especially true if the individual has been hospitalized due to injury, or has lost a job or other source of income.


For these people, a structured settlement can be too little too late. So what are your options? If you anticipate that a structured settlement might not be enough to cover your needs, try as hard as you can to get your settlement in a single lump sum. If this strategy fails, or if you already have a structured settlement in place from an earlier settlement, you may have to sell the structured settlement instead.


This strategy has pros and cons. The main con is you’ll sell the structured settlement for less than it’s worth. But if you work with a reputable company like Einstein structured settlements, you’ll get the most money possible. What’s more, you’ll be able to turn that money into something that benefits you far more than a monthly payment. You might be able to put a downpayment on a house, start a business, or pay off your student loan debt. Whatever the case, a lump sum is money that can be used for bigger purposes than small monthly stipends. So carefully make this decision and make sure the way you use your money benefits you for years to come.


About the Author

Financial professional and online entrepreneur, I'm best known as The Financial Blogger. I want to make money because I like enjoying life the way it should be; with a lot of great food and wine! I also love to spend time with my lovely wife and 3 kids!