A structured personal injury settlement provides compensation through periodic payments rather than a single lump sum. Recipients receive scheduled disbursements according to a customized payment plan, typically on a monthly or annual basis.
These payments are generally funded through annuities purchased by insurance companies. Once established, the payment schedule is fixed and guaranteed, providing predictable income for a specified period or, in some cases, for the recipient’s lifetime.
Our Pennsylvania personal injury attorneys at Munley Law can guide you in the right direction when you are considering how to receive your personal injury settlements. When you are injured in an accident in PA, we’re here to help. Contact us today to schedule a free consultation.
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The Benefits of Structured Personal Injury Settlements
Structured settlements offer specific benefits, including: 
You Don’t Pay Taxes
Personal injury settlements are usually tax-free under federal law, and this includes structured settlement payments. The interest that builds up inside the annuity is also tax-free. This is different from a lump sum that you invest, where you’d have to pay taxes on any money you earn from those investments.
Protection from Overspending
Many people who get large settlements have never managed such a large sum of money before. Research shows that many injury victims spend their entire settlement within a few years. This happens through bad choices, pressure from friends and family, or falling for scams.
Structured settlements protect you automatically, as you can’t access huge amounts all at once. You get what you need when you need it, and there’s no temptation to overspend.
Guaranteed Money Coming In
Stock markets go up and down, and the economy can crash. But your structured settlement payments stay the same. They keep coming no matter what happens in the world. This is really important if your injuries stop you from working or reduce how much you can earn.
You Can Customize Your Payment Plan
Structured settlements are flexible. You can set them up in a number of ways to best match your needs. Maybe you need money for ongoing medical care, to replace your lost wages, or to pay for a child’s college later? You can set the settlement to begin payments right away or postpone that start date until later.
You can also structure the payment amounts to grow over time to keep up with inflation, or make certain payments larger to cover upcoming expenses. Or you can schedule payments to last for a certain period, even until the projected end of your life. Should you die before the settlement pays out in full, you can include the remainder of the payout in your will and leave it to your family.
Downsides of Structured Personal Injury Settlements
While structured payments have their benefits, there are downsides you need to consider:
Your Payments Stay the Same
Once you set up a structured settlement, you’re stuck with the payment schedule. Even in a real emergency, you can’t receive more than your scheduled payment.
Most structured settlements lock in the payment amount from the start. This means if your expenses increase in the future, your payments will remain the same.
The interest rate for your annuity is also set when you buy it. If rates are low, your money won’t grow as much.
Problems with Government Benefits
This is really important for Pennsylvania residents who receive Medicaid, SSI, or other income-based assistance. Your structured settlement payments may be treated as taxable income, which could result in the loss of these benefits.
To keep your benefits, your lawyer might suggest a Special Needs Trust. This is a special account that can hold your settlement money. Pennsylvania law allows these trusts to protect your settlement while keeping you eligible for government help.
Lump-Sum Settlements: The Other Option
A lump-sum settlement means you get all your money at once, giving you complete control and immediate access to the full amount.
With a lump sum payment, you can pay all of your urgent bills right away, or you can invest the compensation with the help of a financial advisor. It is also easier to include in your will and estate plans.
However, there are some downsides to a lump sum settlement. You risk spending your money too fast. It is also easier for creditors to initiate collection actions against you, and family and friends may pressure you to give them some of the money you should be using towards your various injury-related expenses.
Hybrid Settlements: Getting Both Benefits
You don’t have to pick just one option when you are awarded a personal injury settlement. Many settlements combine both approaches. You get some money now for urgent needs and guaranteed payments later for long-term security. 
A typical hybrid plan might include an up-front payment of 25-40% for immediate needs, alongside monthly payments to replace your lost paycheck, yearly or periodic larger payments for significant expenses, and/or a final payment when you retire
Here’s an example with a $600,000 settlement:
- $150,000 right away for medical bills and home changes
- $2,000 every month for 15 years to replace lost wages
- $25,000 every 5 years for things like buying a car
- $100,000 at age 65 for retirement
“At Munley Law, our mission is simple: to provide all injury victims equal access to justice, even against the most powerful entities. For more than 65 years, we have been the voice for the injured, the forgotten, and those who need someone to stand beside them in their darkest hour.”
Marion Munley
Call us at (844) 686-5397 How to Choose The Right Type of Personal Injury Settlement in Pennsylvania
Your choice of personal injury settlement depends on your specific situation. Here are the main points to consider:
Your Medical Needs
Do you need ongoing treatment or long-term care? A structured settlement makes sure you have money when you need it.
Do you need expensive medical equipment or home modifications right now? Then you might need more money up front.
Your Money Situation
Are you about to lose your home or have debt collectors calling? You might need cash now.
Do you have kids or others depending on you? Structured payments protect them even if things go wrong.
Be honest about whether you’re good at managing money. If not, structured settlements help protect you.
Your Job Situation
Can you go back to work? If your injuries mean you can’t work anymore, structured settlements replace that lost income.
If you’ll return to work soon with good pay, you might prefer cash now to pay off debt.
Pennsylvania Rules and Laws
Pennsylvania doesn’t tax injury settlements on state income. This makes both options good tax-wise. But you need to understand Pennsylvania’s rules about creditor protection and Medicaid.
If you need to keep government benefits, work with Pennsylvania lawyers who know about Special Needs Trusts. At Munley Law, our personal injury attorneys will ensure that your settlement is set up correctly and offers the maximum benefits.
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Munley Law is Here to Help with Your Personal Injury Settlement
Choosing how to structure your settlement is one of the biggest financial decisions you’ll ever make. Getting your money all at once versus over time will affect your financial security and quality of life for years to come.
If you’ve been injured in Pennsylvania and need to make settlement decisions, you need experienced legal help. The award-winning lawyers at Munley Law have nearly seven decades of experience helping injury victims across Pennsylvania and have secured landmark victories, including a $32.25 million aviation settlement, a $26 million truck accident settlement, and a $20 million reckless driving settlement. With over $1 billion in settlements and verdicts in total, we can help you evaluate settlement options and negotiate structures that protect your future.
Don’t make these big decisions without proper legal help. How you structure your settlement can mean the difference between lasting security and running out of money. Contact our Pennsylvania personal injury attorneys to discuss your case. We’ll help you make smart decisions about your financial future.
Common Questions About Structured Personal Injury Settlements
Can I change my structured settlement after it’s set up?
Usually, no, you cannot change your structured settlement after it’s set up. Structured settlements are designed to stay the same once you create them. Pennsylvania law allows you to sell future payments through a court process. But you’ll lose a lot of money doing this.
Are structured settlements protected in bankruptcy?
Yes, structured settlements get some protection in bankruptcy. Pennsylvania and federal bankruptcy laws protect future payments better than cash sitting in your bank account.
What if the insurance company goes broke?
To protect your money if an insurance company goes bankrupt, structured settlements use annuities from life insurance companies. Pennsylvania regulates these companies strictly. They must maintain a cash reserve and participate in state protection programs. These programs help if an insurer fails.
How do structured settlements affect child support?
Pennsylvania family courts usually count structured settlement payments as income when calculating child support. The court looks at your actual monthly income, including settlement payments, when deciding what you owe.
Do I pay the lawyer’s fees on the entire settlement, or just what I receive?
Lawyer fees are usually based on the total settlement amount, not the payment schedule. Your fee agreement should clearly explain how fees work with a structured settlement.
