Structured Settlements

| February 1, 2013 | 0 Comments

Structured Settlement

There are some of us who are very eager to learn about structured settlements. If you are among these people, this is your chance to familiarize it. A structured settlement is a particular kind of arrangement wherein the payments will be made over a period of time, which is decided after an insurance claim or lawsuit. There are some structured settlements that involve a part of the payout, and it is usually done up front. The payment of the outstanding balance will then be ‘structured’, whether on a monthly basis, semi-annually or annually, depending on the needs of the claimant.

History of Structured Settlements

Structured settlements were first utilized during the mid-1970s, in accordance with the ‘Internal Revenue Code’. This specific code enabled the defendants to buy certain annuities for the sake of funding their monetary obligation. These annuities will then be paid over a span of time, covering the judgment given to the defendant. Structured settlements were developed to cover ‘huge cataclysmal injury-related cases’. Nowadays, though, structured settlements are commonly utilized to solve the small-scale kind of cases, usually cases that involve figures lower than $50,000.

Function of Structured Settlements

When a person wins a personal injury case and gets to receive a lump sum, he or she does not automatically obtain the full amount all at once. In such cases, many people prefer to receive structured payments instead. They prefer to have this kind of option to easily meet present, as well as future monetary obligations.

Structured settlements serve as a guarantee for a claimant to receive a financial settlement after winning a lawsuit. Structured settlements offer financial stability for individuals who fell victim to permanent injuries or loss due to an accident or illness. Because the chance of getting a job and earning a steady stream of income becomes almost non-existent, a structured settlement is necessary.

Considerations for Structured Settlements

Majority of structured settlements also involve up front payments, besides periodic payments. Upfront payments are commonly used for legal fees, medical-related expenditures, and other fees associated with the acquired injury. The claimant may opt to receive periodic payments over a period of time or a lifetime, or receive a combination of periodic payments and a lump sum, or otherwise choose to defer payments until a later date. The choice heavily depends on the needs of the claimants, thus careful consideration is advised before finalizing the terms.

Perks of Structured Settlements

One great thing about structured settlement is the fact that it is tax free, both on the state and federal levels, when in fact the lump sum amount may provoke taxes on any interest which may be accumulated from it. In most cases, the attorney’s fees are low when a structured payment plan is chosen. Furthermore, as periodic payments are expected in structured settlements, financial security and a steady stream of income makes it a viable option when settling personal injury claims.

If you have structured settlements and are looking to sell it, take a look at Strategic Capital Structured Settlements.

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