Advantages and Shortcomings of Structured Settlements

If you receive the entire settlement amount in one go, then you will not be taxed for it. The IRS believes that this money is supposed to help you get back on your feet and hence, exempts it from taxation. On the other hand, it will most definitely tax the interest that you will earn once you invest that settlement money. That is why, it is necessary to consider the good and the bad points of receiving the entire personal injury settlement amount all at once.

One of the primary points to consider is that as many as ninety percent of people suffering from personal injuries are finished with their settlement money before the end of five years. This happens mostly because of lack of good fiscal guidance, unplanned and bad investments, or lending money to family and friends. Such badly taken decisions only lead to ineffective management of the settlement money.

Next, receiving the settlement money in one go puts you at risk of being taken advantage of. The knowledge that you have received such a large amount of cash will have creditors knocking on your door if you owe them money, con artists thinking of ways to lighten your load, and ex-spouses demanding their share of the booty.

Lastly, always keep in mind that your total rate of return will be greatly reduced once the investment of your recovery money is taxed. Besides this, paying an expert to look after your settlement money is going to lessen your return even more. Taking charge of your own investments offers you anytime access to your settlement amount, but it is also one of the chief drawbacks of choosing this alternative.

Despite the seemingly obvious flaws in this option, having a part of the recovery money in investments that can be easily liquidated is a good idea. Investing in certain fiscal assets with fewer liabilities can also become advantageous in terms of taxation. Having ready cash at your disposal only gives you more control over adverse situations. And our knowledge of conventional methods of investment has proved that they do provide better returns than fixed settlements can hope to give.

Bill Tilley - President

Amicus Capital Services LLC

25876 The Old Road #340

Valencia, CA 91381

Phone 661-263-0030

info@amicuscapitalservices.com

http://www.SettlementPlanningServices.com

http://www.AmicusCapitalServices.com

Article Source: http://EzineArticles.com/?expert=Bill_Tilley