FindLaw.com Accident Injury Law on Structured Settlements: Pros & Cons
Would you use a screwdriver to hammer in a nail? Probably not. Using the right tool for the right job is key. Likewise, learn the pros and cons of using a tool for your clients known as structured settlements in this article by FindLaw.com.
Highlights To Consider:
Pros of a Structured Settlement
A structured settlement may provide a plaintiff with a substantial tax benefit because personal injury settlements are considered "tax-free" under the U.S. Tax Code. However, some exceptions apply and can make portions of a settlement taxable, such as an award of punitive damages or interest that accrues on the settlement. Speak to a qualified attorney or tax specialist to learn more.
Cons of a Structured Settlement
Certain parts of a settlement, regardless of whether they are lump sum or structured, can be taxed—including but not limited to punitive damages, some attorney's fees, and purely emotional damages not stemming from physical injury. It's important to speak to a qualified attorney regarding which parts of a settlement can be taxed.
