What Is A Structured Settlement


Most people have only been exposed to the term structured settlement from the ‘need cash now’ commercials played during the middle of the day, or late at night. If you won a court case and were given a settlement, you  would most likely receive payments for what is owed to you from the settlement. These payments are called a structured settlement. It is an agreement that provides a plaintiff with regular payments over the course of time. Typically, the more severe the damages, the more money will be received.


The Benefits of a Structured Settlement:



One of the characteristic of structured settlement is that they are tailored according to the plaintiff needs. For instance, payments can be made immediate to cater for the plaintiff medical expenses or paid late in installments to cater for general upkeep, college funds or come as income replacement in the case of a severe body injury.


Income Tax Free Payments

The advantage with structured payment is that they are free from tax. Despite there being some exceptions such as taxation of punitive damages, majority of the settled paid amount more so payments related to workers’ compensation and personal injury claims are always non-taxed.


Maximization of Benefits

This is probably one of the most important things to consider when thinking about selling your structured settlement. These lifetime, or timely payments will total substantially more than if you sell the structured settlement for the lump payment.


Beneficiary Protected

Structured settlement payments do not end with the premature death of the recipient of the settlement. These payments are structured in a way that even after their death; a beneficiary chosen by the plaintiff gets the entire future payment amount.

Possible Negative Attributes Of A Structured Settlement


Vulnerable to Changes in the Economy


Despite the safety measures instituted to safeguard this structured settlements, they too are vulnerable to economic changes such as inflation and uncertainty in the economy. These factors interfere with the annuity amounts by making them smaller in value.


Lack of Cooperation by Insurance Firms


If faced with the question of what is a structured settlement and what it helps with, you understand payments can offer relief to any personal injury payment is done in the right way. Consider hiring the services of a professional attorney to help you negotiate for you profitable structured settlement deals.







The Legal Structure and Requirements of the Settlement Plan


There must be an injured party that will file a case.  When this has been agreed, the Defendant hires a third part company which will be responsible of settling the periodic payments to the claimant. The third will then purchase an asset, like a life insurance that will be funding the claimant every time the payment dates are due. The third party normally receives money from the defendant to pay the claimant so sometimes it could have some delays as well.


In less common situations, which are rare, the defendant remains with the obligation to fund the claimant through an annuity. . The annuity must match the exact amount, and it should be able to pay timely and fully without any deficits otherwise, it would be nullified by law anytime it becomes inefficient. Many people like third parties to avoid the defendant remaining with the contingent liability and to settlement plan transfer in case of death of the claimant. Third parties also offer relief to the defendant because once the case is assigned, the whole settlement plan is cleared off the books of the property holder and it becomes clear from the claimant like as if nothing happened.


A claimant is supposed to receive money as part of the settlement plan immediately after the settlement plan has been approved before he or she waits for the future periodic payments to continue. Sometimes the plan could have some specific rights attached to the claimant which the defendant must fully meet to ensure that there is maximum satisfaction so that the settlement plan is not rejected.