November 24, 2017

Personal Injury

Personal Injury settlements usually arise from physical accidents including slip and fall, accidents on the job, vehicle, motorcycle and industrial mishaps. Personal injuries can also arise in situations dealing with medical malpractice, hazards on work premises and product defects. The use of a Structured Settlement for such cases is often convenient and desirable in order to protect the victim financially. The injury usually is severe enough to impede the claimant from performing their work duties on a full-time, or even part-time, basis thus creating the need for a steady stream of income.

An injured party should consider a Structured Settlement for any Personal Injury case that involves long-term medical needs, temporary or permanent disabilities, mental incompetence, or a shortened life expectancy.

Victims of Personal Injury claims have the right to be compensated for damages caused to them by the negligence of others. There is a low minimum and no maximum amount for these types of settlements because the amount is dependent on various factors including: the nature of the injury, the amount of time the injury is expected to last, whose negligence led to the accident and the economic damages caused to the injured party. Economic damages may include, but are not limited to, lost wages, medical bills, and the opportunity costs of being healthy. General damages for such settlements include pain, suffering and distress.

As far as taxation, any damages caused by the injury are excluded for tax purposes (tax-free) and only punitive damages are taxable. Punitive damages are meant to not only punish, but also to deter the defendant and others from committing similar acts as those that formed the basis of the lawsuit. The Internal Revenue Code, Section 104(a)(2), underlying that any damages received as a result of personal physical injury or physical sickness would be income tax exempt, specifically excludes punitive damages. With punitive damages being taxable, the preparation of a Structured Settlement is very critical and should be conducted by professionals to avoid IRS penalties.

At Vega Settlement Group, we ensure that our financial consulting allows for the Personal Injury Structured Settlement to provide tax benefits as well as future income for our clients.