Once your wrongful death lawsuit has been settled by agreement, the next question you may have is, “How are wrongful death settlements paid out?” Settlements are either paid out as a lump sum payment to you or paid periodically over time through a structured settlement. Each method of payment has advantages and disadvantages.
The manner that wrongful death settlements are paid is typically agreed to by the parties during negotiations. Knowing the difference between these two methods can help you have a more informed discussion with your personal injury attorney about which arrangement would work best for your situation.
Lump Sum Payment: Receive Your Money All at Once
In a lump sum payment arrangement, the defendant in your wrongful death case will pay the amount agreed upon in one single payment. This method’s greatest benefit is that you will receive all monies due to you at the same time and do not need to wait months or years for the full settlement to arrive.
Some prefer a lump sum payment because it allows them to pay off the debts they’ve incurred during the pendency of the case. Being able to quickly pay off medical bills and legal fees, for example, can provide significant relief to you at a time when you are trying to establish yourself and your family anew.
Most often it is businesses like insurance companies and larger corporations that are able to make a lump sum payment. For individuals and small corporations, the amount of many wrongful death settlements will far exceed their ability to pay immediately.
In these situations, the at-fault party’s financial situation may be the deciding factor in whether a lump sum payment is even possible.
Not all individuals like lump sum payments, though. You may worry that you will spend the money too quickly if you have it all at once. Or you may have intended your settlement to provide for your child or grandchild as they grow up.
If you’d rather not receive the money all at once, you may need to put your lump sum settlement payment into a specialized trust, which can then allow you to receive periodic payments.
You can reasonably expect to receive a lump sum payment pursuant to a settlement agreement within a few weeks of reaching a settlement.
Structured Settlement: Receive Your Money over Time
The alternative to a lump sum payment is a structured settlement or structured payment plan. Unlike a lump sum payment arrangement, in a structured settlement, the other party agrees to pay you periodic payments over the course of months or years. The payments continue until the entire agreed-upon amount is repaid.
Small businesses and private individuals are more likely to agree to a structured payment plan because they typically lack the resources to pay a wrongful death settlement upfront. Structured payments allow the responsible party to pay you over time, thereby making the payment amounts easier to manage.
In a settlement involving structured payments, you and the other party will agree to the number of payments that will be made and the amount of each payment. The greater the amount the settlement is for, the longer a structured payout could take. You and the other party have control to decide the precise length of any structured settlement plan.
A structured settlement, with assurance that they would not be expected to pay compensation in full upfront, may encourage a defendant to accept a settlement agreement. Receiving periodic payments may also help keep you or your family members from spending all of the settlement money on frivolous purchases.
If you need cash immediately but your settlement calls only for a structured payout, you are not completely out of luck. There are businesses that will take the rights to your structured settlement in exchange for an immediate payment to you.
Essentially, these businesses give you an immediate payment, typically less than the amount you would receive through your structured settlement, and in exchange, the business receives your structured settlement payments. Be certain that you understand upfront how much of your settlement you will actually receive for using such services.
How Are Wrongful Death Settlements Paid Out? Consider the Long Term Effects of Your Choice
Once you have agreed to either a lump sum payment or a structured payment plan, it is extremely difficult to change the agreement. You will want to discuss with your attorney how wrongful death settlements are paid out before you finalize any agreement.
Sometimes the other party’s financial situation will dictate whether your payout will be a lump sum payment or structured payments.
When you do have a choice between the two payout methods, consider each method’s strengths and weaknesses. Your family’s needs and goals for any settlement payment should play a role in your ultimate decision.
Since 1992, our personal injury attorneys at the Pines Salomon Injury Lawyers, APC. have been fighting for the people of San Diego. Now, when those injured in automobile accidents – including car, truck, and motorcycle accidents – need financial help, or for the families that need to know that the loss of a loved one could have been prevented, there is a personal injury law firm in San Diego that is on their side. If you or a family member has been injured, call the lawyers at Pines Salomon Injury Lawyers, APC. There’s never been a better time than right now to speak to a personal injury attorney—FREE of charge. Call us at 858-551-2090 or request a free consultation online today!
SENIOR PERSONAL INJURY ATTORNEY & FIRM FOUNDER
Michael Pines is a former insurance company attorney who graduated from the University of California Hastings College of the Law in 1987. While he was an insurance attorney, he learned from behind the scenes how insurance companies work and how they decide how much to pay injured people. Now that he works against insurance companies, Michael’s inside knowledge has resulted in significant benefits to his clients injured in car accidents. Learn more about Michael Pines