Understanding Structured Settlements in Texas: A Complete Guide
Once a personal injury case reaches a resolution in Texas, the compensation you receive does not always arrive in one payment. In many cases, the parties involved may agree to a structured settlement, which spreads payments out over a set period of time. While this arrangement works well for some injury victims, it isn’t the right fit for every person.
Knowing how structured settlements work under Texas law can help you make a more informed decision if one is offered in your case. Continue reading for the information you need to know.
What Is a Structured Settlement?
A structured settlement is a type of agreement where the injured party receives compensation through a series of scheduled payments rather than a single lump sum. These payments are typically funded through an annuity purchased by the defendant and their insurance company.
The payment schedule is negotiable. Some structured settlements provide equal monthly payments over a number of years. Others may include larger payments at certain intervals to cover anticipated future expenses like surgeries.
The terms depend on what the parties agree to during settlement negotiations.
How Does a Structured Settlement Differ From a Lump Sum?
With a lump sum settlement, you receive the full amount of your compensation at once. A structured settlement, by contrast, delivers that compensation in portions over time. Each approach has trade-offs worth considering.
A lump sum gives you immediate access to the full value of your award. That can be helpful if you are facing large, urgent expenses like medical bills. However, receiving a large amount of money all at once also comes with risks, including the temptation to spend it faster than planned.
Structured settlements offer more long-term financial stability. The steady income stream can help cover ongoing expenses for years into the future based on losses like diminished earning capacity. They also carry certain tax advantages under federal law.
Can I Sell My Structured Settlement Payments in Texas?
Texas law does allow you to sell some or all of your future structured settlement payments to a third-party company in exchange for a lump sum. This process is governed by the Texas Civil Practice and Remedies Code, Chapter 141.
Before any transfer can go through, a court must approve the sale and determine that it is in your best interest. This requirement exists to protect injury victims from making financial decisions that could leave them without the resources they need down the road.
Keep in mind that selling your payments typically means receiving less than their total future value.
What Should I Look for in a Structured Settlement Agreement?
If you and your lawyer decide that a structured settlement is the right path, there are several details worth paying close attention to before you finalize the terms.
These include:
- The total value of the settlement compared to what a lump sum offer would look like
- How often payments will be made, and whether that schedule aligns with your anticipated expenses
- Whether the agreement includes built-in increases to account for inflation over time
- Whether any portion of the payments can be accelerated in the event of an emergency
These are not details you need to sort through on your own. An experienced personal injury lawyer can work to ensure the agreement protects your long-term interests.
Contact Benton Accident & Injury Lawyers To Schedule a Free Consultation With a Dallas Personal Injury Lawyer
Choosing between a structured settlement and a lump sum is one of the most important financial decisions you may face after a personal injury in Texas. The right choice ultimately depends on various factors, many of which come down to the unique facts and circumstances of your situation.
Contact Benton Accident & Injury Lawyers to schedule a free consultation with a Dallas personal injury attorney to learn about your best course of action.
We proudly serve in Dallas County and its surrounding areas:
Benton Accident & Injury Lawyers
1825 Market Center Blvd # 350, Dallas, TX 75207
Phone: (214) 556-8321
Hours Open: 24/7
Our firm is located near you. We have an office in Dallas.
Find us with our GeoCoordinates: 32.7950252,-96.8241861
