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Should You Accept a Structured Settlement?

December 5, 2012

Traffic accident victims and their families often confront a series of emotionally and intellectually challenging issues in the aftermath of an accident. At the end of a litany of difficult and detailed decisions is often whether to accept a structured settlement offer from the defendant. So, should you take it?

An alternative to a lump sum payment, a structured settlement is a financial arrangement that requires the defendant to make a series of payments in the future rather than a single larger payment in the present. Like many other types of debtor-creditor relationships, a structured settlement has both advantages and disadvantages.

The tax treatment of a structured settlement is one of the principal advantages of periodic payments. Because the annual payments are smaller, the effective income tax rate is often smaller, too, meaning that victims keep a larger portion of their award. Second, structured settlements provide a kind of “drip income.” Beneficiaries tend to spend this kind of income more wisely than a single large settlement. Perhaps most important, structured settlements can often promote compromise and result in the resolution of litigation rather than its continuation.

Importantly, structured settlements are not without risk. Because beneficiaries are required to defer their receipt of payments, some victims may never see all of the benefits to which they’re entitled. Additionally, in so far as beneficiaries become the de facto creditors of the defendant, victims who accept structured settlements face default risk. In the event that the defendant-debtor declares bankruptcy, the plaintiff-creditor may not receive all of the compensation which he is owed.

Need to know more about structured settlements? The attorneys at Fears Nachawati know how to help victims like you. Talk to our professionals today to learn about your options and how we may be able to help you.

About the Author

Attorney Majed Nachawati, who grew up in the D/FW metroplex, provides experienced, vigorous counsel to victims like you. That’s why Mr. Nachawati has been recognized as a Super Lawyer and Top Lawyer in Wrongful Death and Serious Personal Injury Cases across the nation. He has recovered millions for his clients and is a member of the Texas Trial Lawyers Association, the Million Dollar Advocates Forum and the American Association of Justice. To discuss your case with Mr. Nachawati, contact him by email at or by phone at 1.866.705.7584. His legal background is featured at:


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