If you have received a settlement for a lawsuit or other reason, you are likely receiving annual payments. These payments are distributed over a long period of time. Instead, you may prefer to receive a lump sum settlement. A lump sum means that you will be paid for all of the future installments in one payment rather than having to wait.
What are the Advantages to a Lump Sum Settlement?
A lump sum payment gives you access to your money much more quickly. An annuity is a long-term arrangement that provides you with payments over many years. A lump sum payment pays you immediately so you can use the money in any way you wish. Settlement payments over time may not give you the cash you need for the things you want to purchase. For example, if you want to purchase a home, a lump sum payment would give you the benefit of being able to do so much more quickly.
Are There Disadvantages to a Lump Sum Payment?
A lump sum payment may end up being less than the total you would have received with regular installments. You should also keep in mind that you will need to pay taxes on the settlement whenever you receive payment. Regular payments allow you to have a predetermined income over a number of years so you can’t overspend. However, you should remember that you may prefer to have your money now, when you need it, rather than having to continue waiting for the money that is rightfully yours.
How is a Lump Sum Settlement Calculated?
Lump sum calculations can be somewhat complex. In general, you can expect to receive less than you would receive if you took annual annuity payments. This occurs because the amount that you were to receive was extended over a period of time during which the company expected to be able to use the money. Therefore, a one-time settlement will always offer less than the amount would be if calculated over time. Work with an experienced company to obtain the largest single payment possible.
Should I Take a Lump Sum Payment?
The decision to take a lump sum settlement is entirely up to you. You should weigh the benefits carefully when you make the choice to take a single payment. If you decide to take a lump sum settlement the process is easy. You must supply the necessary information and documentation in order to obtain a one-time payment. Once your application is approved you can receive the money directly to you in the form of a check or you may prefer to have it deposited directly into your bank account.
Choosing a lump sum payment is an ideal option for many people who have structured settlement arrangements. Choose a trusted company to provide you with the largest single payment possible from your settlement. You want to make sure that you get the most money available in the fastest length of time possible. Contact us today to get started with your secure application.