Such settlement technique is first introduced in Canada in the 1970s. The idea was so amazing and it quickly grabbed its position in United States and turned popular in Europe countries finally.Structured settlements refer to compensation payments by periodic allowance system. Usually, such annuity payments established to reimburse the settlement recipients losses of income or working ability in long term.

Saturday, 5 February 2011

understanding structured settlement

Have you brought a lawsuit against a company or an individual that you claim caused you permanent harm as a result of their negligence or intentional misconduct? (that’s just a fancy “lawyer” way of saying that you’re hurt and you say it’s their fault). Did you win or settle your lawsuit? If so, then you need to understand the basics about structured settlements, as it may be an important option to consider.

Ordinarily, when you win a judgment or settle your lawsuit the defendant has to pay you the judgment or settlement amount in a lump sum. Let’s say, for example, you have a form of cancer caused by asbestos called asbestosis. You sue the asbestos manufacturer, who agrees to settle out of court for a million dollars (don’t get excited or disappointed; this is just an imaginary amount for example purposes). You get a check for a million dollars, right?

That’s one option, but a structured settlement might make more sense depending on your circumstances. A structured settlement pays you in installments over time instead of a single lump sum.

Installment payments can be structured in a number of ways to suit your needs and to protect you from inflation. They can range from a simple yearly payment to complex arrangements consisting of an initial lump sum payment, monthly indexed installments, deferred payments, and special provisions relating to the future care or death of the insured.

Typically, the defendant would purchase an annuity (from an annuity or insurance company) for a dollar amount that is paid up front. The annuity provides regularly scheduled income payments as specified by you and your attorney under the terms of the structured settlement.

What are the advantages of a structured settlement? Well, for one thing, you are guaranteed a source in income for life. A second important advantage is tax management: you may be able to substantially reduce the taxes you would have to pay Uncle Sam on any investment income that would otherwise accrue from investment of a lump sum settlement.

Apart from the tax savings, it’s also important to "know thy self" when making a decision about structured settlements. Are you the kind of person who would head to Vegas, do a little world travel, buy lots of toys, and basically blow your money until you have nothing left of your million dollars in a year or two? If so, a structured settlement might be the way to go.

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19 comments:

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Lolataylor88 said...

Waiting for settlement money is such a bummer!!!! During the wait, your medical bills stack up and you financial situation gets worse and none of the blame is yours. Its a good thing that I as able to get Lawsuit Cash . I found a company that specializes in settlement agreements and I was able to get my money fast.

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Daniel Milstein said...

That is true. As an author and business man, I can relate to how you said, "That’s one option, but a structured settlement might make more sense depending on your circumstances". I hope more people discover your blog because you really know what you're talking about. Can't wait to read more from you!

David Abraham said...

Nice informative blog, thanks for sharing.

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Brooke Davis said...

I used structured settlement in my court case last week. It is very difficult finding the right structured settlement companies though. You have to do your research and get the best. I found a fantastic one to help me out. Thank you for this article. I know more about structured settlement now. Hope this finds you well. Have a great day!

Charles Peake said...
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Structured Settlement said...

This was really interesting! I have never had to deal with a structured settlement but I am learning about them in school, so I am reading all that I can on them. I didn't know how it worked- if you win a case and you get x amount of money, that it can either be paid in a lump sum or over a long period of time. Thanks for posting! This is a great reference.

John Rynd said...

Thanks for posting! I had no idea how this structured settlement process worked. I am trying to learn as much as I can on the topic because I am trying to decide if this is the right thing for me to do. Great post!

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Mike Loshe said...

Thanks for the share! Now say I was to sell my structured settlement payments for a lump sum of cash, is that cash I received also taxed? I am wondering because I am thinking about selling it, but if the cash is taxed it might not be worth it given my situation.

Ann Shirley said...
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Ann Shirley said...
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