If you've reached a personal injury settlement in Massachusetts, one of the biggest choices you'll face is how you'll actually receive your compensation. Some people opt to take the money all at once in a lump sum. Others choose to spread it out over time through what's called a structured settlement. Both options have pros and cons—and the best choice often depends on your personal situation.

Read below as we walk you through how each type of settlement works, the key differences between them, and what Massachusetts law says about these payouts. We’ll also look at who might benefit more from one approach over the other.

What Is a Lump Sum Settlement?

A lump sum means you get the full amount of your settlement at once. It’s a single payment that gives you access to all the money up front.

Why Some People Choose a Lump Sum

• Immediate access to funds: If you have outstanding bills, lost wages, or big expenses, a lump sum helps cover them quickly.
• Flexibility: You can decide how to use or invest the money, with no restrictions.
• Simpler process: Once paid, the case is closed—you don’t have to wait on future checks.

Things to Watch Out For

• Temptation to overspend: Without careful planning, it’s easy to spend the money quickly.
• No do-overs: You can’t ask for more money later, even if future medical costs arise.
• Potential tax implications: While most personal injury settlements aren't taxed in Massachusetts, any interest or investment earnings may be.

What Is a Structured Settlement?

Structured settlements are different. Instead of getting your money all at once, you receive it in scheduled payments over time. These payments are often made monthly, annually, or tied to future needs like college or medical care.

Why Some People Choose a Structured Settlement

• Long-term financial security: It helps you budget and ensures the money lasts.
• Custom payment plans: You can set up payments for big milestones or recurring expenses.
• Tax advantages: The payments are usually tax-free if tied directly to a personal injury claim.

What You Give Up

• Less flexibility: You won’t be able to access a large sum if an emergency comes up.
• No control over the money: Payments are usually made through an annuity company.
• Locked-in terms: Once it’s set up, you typically can’t change the schedule or amounts.

How Massachusetts Law Factors In

Massachusetts doesn’t have laws that favor lump sum or structured settlements, but certain rules apply depending on who is receiving the money and what the case involves.

Settlements for Minors

If a child is the one receiving the settlement, the court will likely require approval and may lean toward a structured payout to protect the child’s long-term interests.

Court Review of Settlements

Some cases—such as wrongful death or medical malpractice—require court approval of the settlement terms. Judges may review whether the structure meets the injured person’s future needs.

Dealing With Liens

Health care providers or insurance companies may be entitled to a portion of your settlement through a lien. In these cases, a lump sum might be more practical to resolve outstanding obligations quickly.

How to Decide What’s Best for You

The right choice depends on your specific situation:

• Do you need to cover large bills right away?
• Are you financially comfortable managing a large payout?
• Will you need consistent income over the next several years?
• Are there long-term medical or care costs to plan for?

These are all questions you should think through with both your attorney and a financial advisor.

A Real-Life Scenario

Let’s say you receive a $900,000 settlement for injuries from a serious car accident in Massachusetts. If you’re 25 years old, unable to work full-time, and need continuing care, a structured settlement might offer long-term stability. But if you’re nearing retirement and facing high medical expenses today, a lump sum could give you the flexibility to manage your own investments and care plan.

Call Brandon J. Broderick For Legal Help

Choosing between a lump sum and a structured settlement isn’t just a financial decision—it’s a legal one that can impact your future for years to come. At Brandon J. Broderick, Attorney at Law, we’re here to help you weigh your options and make the choice that works best for your life.

We take the time to explain the pros and cons clearly and work with trusted financial professionals to help you plan ahead. Contact us today for a free consultation and take the next step with confidence.