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Understanding Structured Settlements in Colorado

Sometimes, when a plaintiff receives a large settlement after a car accident, the defendant, the plaintiff’s attorney, or a financial consultant with knowledge of the settlement, will suggest paying the settlement in installments over a period of time rather than in a lump sum. A settlement paid in this manner is called a “structured settlement.” Typically, the settlement will be constructed through the purchase of one or more annuities, which act as a type of guarantee.

Structured settlements in Colorado can take one of several different forms. You could be paid in annual installments over a number of years, or you could receive periodic lump sums every few years. Your personal injury attorney can work in conjunction with your financial advisor to determine the best possible settlement schedule for you.

Benefits of a Structured Settlement

Structured settlements may offer some victims certain advantages to receiving a large lump sum of money. The benefits may include:

  • Little or no taxes- A properly constructed structured settlement could minimize your tax obligations as a result of receiving the settlement. Depending on your personal circumstances, the money might even be tax free. Your attorney along with your accountant will be able to determine the manner that best fits your situation.
  • Financial security- Many recipients of large settlements are tempted to spend the money right away, leaving themselves unable to cover the inevitable future expenses related to their injury. Injury victims with long-term needs could benefit from periodic lump sum payments to supply themselves with necessary medical equipment.
  • Special needs trust- If you become severely disabled as a result of the accident, your attorney may suggest that you establish a special needs trust. A disabilities financial planner can work with you and your attorney to determine if this option is best for you.

Disadvantages of a Structured Settlement

Not everyone will benefit from the same type of settlement schedule. The following are possible disadvantages depending on your personal situation:

  • Financial need- Sometimes a victim may have an extreme financial need which necessitates a lump sum payment. However, accepting a lump sum payment may result in an overall smaller award. Your attorney can advise you on this situation.
  • Good investment- A financially savvy accident victim may be able to invest the lump sum amount and reap much higher dividends than the annuities used in a structured settlement- ultimately collecting a far greater amount than the original settlement.

Contact Our Denver Car Accident Lawyers

Structured Settlements in Colorado Experts, Fuicelli & Lee, P.C.If you or someone you love is injured in a car accident, we can review all of your legal options with you and help you choose the legal path that is best for you and your family. Contact the law firm of Fuicelli & Lee, PC, for a free case evaluation. You pay nothing unless you receive a financial settlement or award. Call our office at 303-355-7202 or fill out our confidential contact form.

 

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