What is a structured settlement?

The outcome of a successful lawsuit for negligence can be a judgement in favor of the complainant, a judgement in favor of the defendant, or a settlement between the two parties. In cases where a settlement is reached, the defendant agrees to pay an amount that is less than the amount the plaintiff had originally sought. In terms of paying that settlement, there are two options: The plaintiff can either opt to receive it in one lump sum or in installment payments. The second option is known as a structured settlement.
 Structured settlements don’t all look the same. The payments structure can range in complexity from a simple, once-yearly payment to much more complicated incarnations. For example, it is possible to have some of the settlement paid in a lump sum upfront and then have the remaining balance paid in a variety of installment options. These can include deferred payments and indexed payments. Typically, a complainant will purchase an annuity from an insurance company or annuity company. That annuity provides the payout to the complainant in accordance with the terms of the settlement agreement.
Opting for a structured settlement offers many benefits to the complainant as compared to a one-time payment. The annuity will guarantee a continuous income stream whereas with a lump-sum payment once the money is gone, it’s gone. In other words, a structured settlement may be a better option for those who may otherwise struggle to effectively budget the settlement amount if it is paid all at once. The decision whether to opt for a structured settlement or a one-time payment depends largely upon the payee’s money-management personality. A structured settlement can be an effective way to ensure the payee has a recurring income stream into the future.
Further, a structured settlement offers the payee some benefits at tax time. Recipients of a structured settlement may be able to reduce the amount of taxes they pay because they would not be subject to tax on investment income such as would be levied on a large one-time payment.
There is a downside to a structured settlement, however. It is important to realize that the terms of the settlement are concrete. They cannot be changed later. Because of the finality of the terms of the settlement, it is imperative to get advice from a knowledgeable lawyer and tax expert. They can offer advice that will pertain to each particular case and negotiate settlement terms that can will best suit the situation.


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5 thoughts on “What is a structured settlement?

  1. Welcome to the USSA. (no typo) The United Socialist States of America. The American people had closed ears when Obama said, We are ..Days Away From Fundamentally Transforming The United States of America." And he has… Vote him out & vote out every other SOB who voted for this health care bill.

    "I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them." – Thomas Jefferson

  2. It depends on the state in. Generally, you should contact your attorney in writing and let him/her know things are not going as ordered. If he/she does not cooperate, you can dismiss the attorney (in writing) and hire a new one. Get the old attorney to file a Motion to Withdraw as counsel. You could contact another attorney or the where your order was issued to find out the options in your state.

  3. Yes, your entitled to a copy of any deposit receipts/accounts payable/receivable related to your case. In fact, your are legally entitled to a copy of your entire case file and those transactions should be of that file.

    I would be in his/her office requesting that copy at my earliest convenience.