What is the difference between a structured settlement and a lump-sum settlement?

In Massachusetts, structured settlements and lump-sum settlements are the two main types of settlements associated with personal injury law. A structured settlement is an agreement between two parties that provides a victim of a personal injury with payments over a period of time, rather than a one-time lump-sum payment. The payments can vary in terms of amounts and frequency, and are usually paid out in a tax-free manner. A lump-sum settlement is an agreement between two parties in a personal injury lawsuit where a large sum of money is paid all at once, as opposed to a structured settlement. This single payment is generally a much larger amount than the total of all the payments the victim would receive in a structured settlement. This is because the defendant is offering a settlement to avoid the risk associated with going to trial. The two biggest differences between structured settlements and lump-sum settlements are the timing of the payments (all at once vs. over time) and the amount of money received (usually much higher lump sum vs. smaller, individual payments). Ultimately, the decision of which settlement to accept needs to be based on the individual’s financial situation, needs, and goals.

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What is the difference between a structured settlement and a lump-sum settlement?

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