Lump sum vs structured settlements for personal injury claim settlements

Serving Greater Vancouver and Nearby Areas of British Columbia

The vast majority of personal injury claims are settled for a single lump sum payment but there are situations in which it is more appropriate to have the funds paid out over a period of time.

For instance, when there are devastating injuries that result in an ongoing disability preventing the injured party from obtaining gainful employment, we generally will encourage the client to set up a structured settlement in order to protect the client against depletion of the settlement funds. There is great flexibility as to the terms of the structure. Often there will be an initial lump sum payment followed by a stream of monthly payments. Payments can be a fixed monthly amount or indexed over time to allow for inflation. The monthly payments can continue until the client reaches 65 years of age or continue for the client’s entire lifetime. They could also continue for a fixed number of years and be made payable to the client’s dependants or heirs should the client pass away during that time

In addition, there is a significant tax advantage to be gained by entering into a structured settlement because the periodic payments are not taxable as they are not considered to be income.

In appropriate cases Stephens & Holman will arrange for the very best structure for our clients in order to protect their future.