Structured Settlements: Accept It Or Not? Get The Right Answer

Structured Settlements: Accept It Or Not? Get The Right Answer

This is why buyers of structured settlements prefer it over anything else.

Lump Sum payments are generally preferable to a structured settlement in the case of injuries. However, there are a few exceptions. It means the defendant makes the payment to you, and then the payment settles the case. Instead of the lump sum payments, there are a few plaintiffs that you must opt to have the compensation paid out in a structured settlement. In a structured settlement, all the income paid to the plaintiff covers up in the future years.

A part of the settlement is paid to the plaintiff, and the lawyer immediately makes the settlement in lump sum. Some structured settlements involve lifetime payments. This is why buyers of structured settlements prefer it over anything else.

How Do Structured Settlements Work?

When the defendant agrees on a structured settlement, the defendant's insurance organization transfers a part of the settlement to a different insurer. It's a life insurance company that specializes in handling structured settlements. Make sure that the organization that pays the money is highly rated. If the organization fails or declares bankruptcy, it means your structured settlement is also gone. It means there's a slight risk in a structured settlement as well.

Everything with a buyer of structured settlement annuity can be negotiated, including -

- How often do you want to receive money

- The length of the structure

- How much money do you want to receive in each payment

- Whether you want a lump sum amount or in advance

- Whether you want payments after retirement or want it for your heirs.

Benefits Of Structured Settlements

- Lump Sum payments are traditional methods of resting the case where the defendant sends you a cheque and then encash it. The case is over. If you're settling for larger cases, there are two good reasons why you must go for structured settlements -

- The first reason is that you won't spend your money quickly in structured settlements.

The second is structured settlements save your money on taxes. So, for example, the money you receive for personal injury settlement is not taxable. But, still, you do have taxes on the dividends and interests received on the settlement money that you've invested in. And, that can be a huge tax payment annually for you. With a structured settlement, you'll have less money sitting in the bank. It means lower tax obligations.

Let's Calculate The Number Of Structured Settlements

For instance, let's say you want to receive $100,000 per year for the next 20 years. Furthermore, you want to add payments to your heir's account before you die. Although your heir will receive $2,000,000 after the 20 years are up, the defendant will be paying less than $2,000,000 to fund your settlement.

It's because the structured settlement is also called the 'future income stream. It's generally calculated in terms of its present value. Present value is a financial concept that determines the future income stream as if it were in your bank account today itself. Many hire an economist to calculate the value of a structured settlement. Moreover, you can also use structured settlements calculators for the same. There are many devices that can be used in the process.