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Lump-Sum vs. Structured Settlement Payments for Medical Malpractice Claims


Did you know that most medical malpractice claims are settled outside of court? That is because many cases take several months or even more than a year to resolve. 

There are two types of settlements: a lump sum and a structured settlement. The two main factors that differentiate each settlement payout are long-term security and tax liability. 

Lump-Sum Settlements 

A lump-sum settlement means you will receive the entire payout in one payment. Since a significant amount of money is offered all at once, the funds are typically spent rather quickly. 

The following are several factors to consider before you accept a lump-sum payment: 

  • Spending – As we mentioned before, lump-sum settlements are often quickly spent – even on unnecessary items. It is imperative to take your spending habits into account before deciding to accept a lump-sum settlement. 

  • Professional help – Unless you have a handle on investments and the stock market, you may need to hire a qualified financial advisor to manage your lump-sum payout, especially if you have never had that much money before. 

  • Tax obligations – Although any type of settlement is tax-free when you first receive it, you will be tax liable for any earnings you obtain from all investments you made using the settlement. 

Structured Payment Settlements 

On the other hand, the payouts of a structured settlement are distributed over a period of time, rather than all at once like a lump-sum settlement. If you need continued medical care and not able to earn an income in the meantime, then opting for structured payments may be the best course of action. 

Here are some facts about handling structured settlement payments: 

  • There are various payment schedules available – You may receive the payments either monthly, quarterly, or annually. 

  • You may increase payments – In order to keep up with the inflation rate, you may need to increase your payments since the annuity from structured payouts can earn interest. 

  • You may decrease payments – Some settlements start with higher payments but then the amounts gradually decrease over time. This could be the case if there is a decrease in health care rates. 

No matter what type of settlement you ultimately accept, an experienced medical malpractice attorney can help you maximize your entitled compensation. With more than 30 years of experience, look no further than Rash Mueller to protect your rights and best interests from start to finish. 

If you are interested in filing a medical malpractice claim in Weston, FL, contact us today at (954) 914-7116 for a free initial consultation. 

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