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The Financial Implications Of Structured Payments

If you are on the winning end of a lawsuit or a claim of some kind and someone has

been ordered to give you a large payment, there are typically three different options that are available to you. You can get a one time, lump sum type of payment. The second option that you have is to use a structured settlement schedule that will allow you to receive a certain amount of money based upon the schedule that has been set up. The third option that is available to you combines lump sum payments and structured settlements.

If you find yourself on the receiving end of a large sum of money, the first thing that you need to do is to find a good financial advisor. Whether you get the lump sum or you will be receiving smaller payments over a longer period of time, you will be coming into a significant amount of money. Anytime there is money involved, taxes are something that needs to be taken into consideration. When you are talking about a large amount of money, the issue of taxes takes on an even larger level of importance. Many of these payments come with tax benefits; however that does not just mean that you should handle this on your own. A good financial advisor will be your best chance to stay away from paying any taxes over and above what is absolutely necessary

One of the things that you will need to think about when deciding what kind of payment you want to receive is your financial future. Is it more important for you to get a large sum of money at one time or would it be better for you from a financial perspective to be able to receive monthly payments every month. In many cases, the combination approach is the best option. This allows you to get a small windfall right now and it can really help you to get your finances started on the right path. Then you can receive monthly payments that will make it easier for you to meet the cost of living.

Many people make the mistake of assuming that their best course of action is a single lump sum payment because it sounds like fun to have all of that money all at one time. However, the result in far too many cases is that person starts spending their new found wealth on things that they do not need and that are far too expensive. They also do not take any steps to protect the money they just received and end up making bad investments. Before they know it, all of the money form the settlement is gone.

If you make the decision of getting a lump sum payment, it is even more important for you to get a financial advisor of some kind. Chances are that you are not that familiar with dealing with large sums of money. People in the financial services industry are and they will likely protect your money better than you can.

by: Stewart Wrighter
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The Financial Implications Of Structured Payments