Are structured settlements good?

Structured settlements can also be designed to increase payments over the years, starting relatively low and ending higher. Structured settlements can also start high and decline over time. This could be beneficial if you expect your income to increase over time. With a structured settlement, a plaintiff could decide that he no longer wants fixed payments, but rather requires a lump sum.

When choosing a structured settlement, the defendant in the case often buys an annuity from an insurance company. The parties can often reach a hybrid agreement that allows for a large lump sum payment, and then a guaranteed annual payment for some period. The law served as the federal government's acceptance of the IRS ruling and extended restrictions to state governments, prohibiting them from taxing income from structured settlement of personal injury cases.

a structured settlement

is when part or all of the settlement amount is paid to the plaintiff over a period of years.

Structured settlement payments come from an annuity funded by the defendant or his insurer. However, instead of a one-time payment, some plaintiffs choose to have their compensation paid in a structured settlement. In some cases, the plaintiff may have the option of accepting a one-time payment or a structured settlement. With a structured settlement, you have much less money in the bank and, therefore, a much lower tax liability.

Statutory settlements can be paid in a single lump sum or through a structured settlement in which periodic payments are made through a financial product known as an annuity. In the unfortunate event of bankruptcy or asset purchase, the deal could disappear altogether. Even if a plaintiff opts for a structured settlement, they are not necessarily limited to that schedule. By 1985, the National Structured Settlement Trading Association was formed to preserve and promote structured settlements for injury plaintiffs through education.

Those responsible for the evil can accept the settlement on their own, or they may be forced to pay the money when they lose the case in court. A vital and most favored benefit of the structured agreement is the security and peace of mind of knowing that the money will be there when needed. This and other benefits of a structured settlement are not always apparent to the recipients of the settlement or their financial advisors.