What is a Structured Settlement?
A structured settlement payment is a method of compensating
injury victims. Structured settlements are voluntary
agreements reached between two parties, typically a plaintiff
and a defendant, under which the injured person (the
plaintiff) is provided a stream of periodic cash payments
purchased on behalf of the defendant for compensation of damages. Structured Settlements are
completely voluntary
agreements between both the injury victim and the defendant.
How are Structured Settlements paid?
Under a structured settlement agreement, the injury victim
does not receive compensation for their injury in one lump
sum. Instead, the victim will receive a stream of tax-free payments
specifically tailored to meet future medical expenses and basic living
needs.
Why use a Structured Settlement?
Often two parties cannot agree on all terms in a given law
suit so a structured settlement arrangement is made. A
structured settlement is arranged to please both parties by
allowing one
party to get their price while the other gets their terms.
Who sets up a Structured Settlement?
A structured settlement may be agreed to privately, in
mediation, in a pre-trial settlement or it may be required
by a court order. An attorney typically draws up the
necessary structured settlement paperwork required.
How can I cash my Structured Settlement for a lump sum
payment?
Many brokers or companies will purchase and buy
Structured Settlements for a lump sum.
Are there tax advantages to a Structured Settlement?
Structured settlements may also offer a tax advantage,
becoming one of the benefits in using a fixed annuity as part
of a structured settlement. The fixed annuity payments are
income tax-free for the claimant and the liability can be
removed from the defendant's books, in many cases.
What is a Structured Settlement?