After sustaining injuries, victims may pursue personal injury claims. Typically, there’s an important question that comes up during this process: How are personal injury settlements paid out?
Below, Alpizar Law, LLC, describes how clients might navigate this personal injury settlement payment process in Palm Bay, FL.
How Are Personal Injury Settlements Paid Out?
Personal injury victims in Palm Bay typically choose between two primary payout options: structured settlement annuities and lump sum payments. Understanding these options can help accident victims make informed financial decisions after reaching a settlement agreement.
Exploring Lump Sum Insurance Payout Options
A lump sum payment provides the whole settlement amount in one check after deducting attorney fees, medical liens, and case expenses. This option provides immediate funds to cover medical bills, property damage repairs, or lost income.
Understanding Structured Settlement Annuities
Structured settlements provide scheduled payments over a specified period. This steady income stream benefits victims who are unable to work due to injuries, offering more long-term financial stability to help cover future medical expenses. This arrangement may provide some tax advantages.
The Timeline for Receiving Settlement Funds in Palm Bay
How are personal injury settlements paid out after parties reach an agreement? With structured settlements, the payout process typically involves four key steps that occur over 30 to 90 days.
First, victims sign a release form agreeing not to pursue future legal action related to the accident. Attorneys review these documents to ensure clients understand their legal rights. This legally binding contract protects insurance companies from additional claims.
Second, victims resolve medical liens from the healthcare providers and insurance companies that covered their initial treatment costs. These entities receive reimbursement before victims access the settlement funds. Negotiating liens may delay payment, but may increase the final amount the victim receives.
Third, insurance companies send settlement checks to the victim's attorneys, who deduct their contingency fees and case-related expenses. These legal fees often depend on the agreed rates, case complexity, and whether the case went to trial.
Once all the liens and fees are cleared, the victim will receive a final check for the remaining settlement amount. Structured settlements send multiple checks according to the agreed payment schedule. The entire personal injury settlement payment process usually takes between one and three months from the agreement date.
The Tax Implications of Settlement Payouts
How are personal injury settlements paid out and taxed? Under federal law, many personal injury settlement payments for physical injuries remain tax-free, including medical expenses, property damage below the threshold, pain and suffering, and emotional distress. Settlements covering lost wages or punitive damages often require tax payments.
As personal injury lawyers in Palm Bay, FL., Alpizar Law, LLC can explain these potential tax obligations to clients and advise on when to consult a tax professional to properly report taxable portions of the awards.
Alpizar Law, LLC, Serves Palm Bay, Florida
How are personal injury settlements paid out? Anyone who would like to find out about paying for claims can schedule a case evaluation with Alpizar Law, LLC. Call (321) 676-2511 to chat with attorneys who bring more than 65 years of combined experience to the table for personal injury victims in Palm Bay, FL.
