Simply put, a structured settlement is not a loan or a bank account, and the only way to receive money from your settlement is to stick to your payment schedule or sell part or all of your payments to a credited company for a lump sum of cash. Structured settlements occur when a claimant agrees to resolve a personal injury claim and receives all or part of the settlement through multiple payments. An assigned case is a qualified case, meaning that settlement proceeds qualify for tax benefits, and the defendant's payment obligation must align with the provisions of the Internal Revenue Code. Most importantly, keep in mind that each state has its own structured settlement protection laws, laws governing the transfer of structured settlement payments, and that all transactions must comply with federal and state laws.
Settlement payments to the injured party did not count towards their gross income and, therefore, they were not required to pay taxes on the money received. Taking the prize as a structured agreement can help you resist this sometimes intimidating pressure. A structured settlement pays you money through a series of payments (known as an annuity) or a lump sum form of payment. Eliminating debt or using money from withdrawing a structured settlement to cover the costs of major living expenses, rather than borrowing or using credit cards, can give you peace of mind.
If you have significant debt, a structured settlement withdrawal can provide you with the necessary funds to help pay off outstanding balances and get you back on track immediately. 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. If the amount of money is small enough, the injured party may have the option of receiving a lump-sum settlement. In settlement negotiations, a defense attorney may present the possibility of a structured settlement.
When a plaintiff receives a lump sum settlement, they may spend it too quickly, depriving them of the long-term financial security that future payments could provide. A person who sells structured settlement payments to pay back loans needs different options than someone who wants to pay for a car with cash. Although an attorney should always prepare for trial, most plaintiffs and defendants prefer to settle. Wentworth, a company representative will review your settlement fund, the amount of your monthly payments and your current financial needs and offer you two or three different purchase options.
Next, you can learn how a structured settlement works and review some of the things you should consider when deciding to accept a structured settlement or a one-time payment if you win or resolve your lawsuit. 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.