What is Structured settlements
Structured Settlement Definition - What is it?
A Structured settlement is basically payment made periodically to a claimant who has filed a lawsuit as a result of a debilitating injury or sickness due to the negligence or purposeful action of the defendant. Structured settlements can also be an option for lottery winners in receiving periodic payments for their winnings instead of receiving the amount in one lump sum.
Payment options in this plan can include basic monthly, quarterly, semi-annual or annual payments. However, more complex arrangements are also possible to include a portion of the payments paid up-front and the rest of the payments paid periodically.
History of Structured settlements
In the mid-1970s, structured settlements were used primarily to manage payments for huge personal injury damages. The Internal Revenue Code allowed defendants to pay for such damages through purchasing annuities to fund the financial obligation. Today, a structured settlement is the most viable option to settle damages for personal injury cases, workers’ compensation lawsuits and insurance claims. It can also be applied to small-scale cases that amount to below $50,000.
Features
Structured settlements, also called periodic payments or payment settlements , serve as a great payment plan for injury lawsuits. For claimants, Structured settlements is a viable option as it offers financial stability and protection, tax benefits, and convenience. For the payee, it is a convenient way to pay a large sum of money.
Periodic payments are an alternative to paying a lump sum. It breaks down the payment over a period of time, usually over a predetermined number of years or over a lifetime. In most cases, structured settlements work as an annuity where payments are made on a regular basis. In other cases, a complex arrangement is chosen by the claimant where part of the lump sum is received in advance and the rest is received through periodic payments.
payment settlements may be spread over the lifetime of the claimant. There can also be a required minimum number of payments to guard against loss through the death of the claimant, in which case, the family of the claimant receives the remaining balance.
Option to Sell –how to sell structured settlements
Although structured settlements offer security for future needs, some people will find this arrangement a hindrance when requiring a huge sum for larger acquisitions or immediate financial needs. In this case, there are financial institutions and individuals that offer to buy structured settlements. When considering this option, keep in mind that buyers intend to make a profit out of this transaction. Therefore you must proceed with caution and consult your lawyer before signing any agreement. Generally, when you sell your structured settlement, you will receive far less than what your settlement is worth. If the benefits are greater than the risks, then you can choose this option with proper guidance from your attorney.
A Structured settlement is basically payment made periodically to a claimant who has filed a lawsuit as a result of a debilitating injury or sickness due to the negligence or purposeful action of the defendant. Structured settlements can also be an option for lottery winners in receiving periodic payments for their winnings instead of receiving the amount in one lump sum.
Payment options in this plan can include basic monthly, quarterly, semi-annual or annual payments. However, more complex arrangements are also possible to include a portion of the payments paid up-front and the rest of the payments paid periodically.
History of Structured settlements
In the mid-1970s, structured settlements were used primarily to manage payments for huge personal injury damages. The Internal Revenue Code allowed defendants to pay for such damages through purchasing annuities to fund the financial obligation. Today, a structured settlement is the most viable option to settle damages for personal injury cases, workers’ compensation lawsuits and insurance claims. It can also be applied to small-scale cases that amount to below $50,000.
Features
Structured settlements, also called periodic payments or payment settlements , serve as a great payment plan for injury lawsuits. For claimants, Structured settlements is a viable option as it offers financial stability and protection, tax benefits, and convenience. For the payee, it is a convenient way to pay a large sum of money.
Periodic payments are an alternative to paying a lump sum. It breaks down the payment over a period of time, usually over a predetermined number of years or over a lifetime. In most cases, structured settlements work as an annuity where payments are made on a regular basis. In other cases, a complex arrangement is chosen by the claimant where part of the lump sum is received in advance and the rest is received through periodic payments.
payment settlements may be spread over the lifetime of the claimant. There can also be a required minimum number of payments to guard against loss through the death of the claimant, in which case, the family of the claimant receives the remaining balance.
Option to Sell –how to sell structured settlements
Although structured settlements offer security for future needs, some people will find this arrangement a hindrance when requiring a huge sum for larger acquisitions or immediate financial needs. In this case, there are financial institutions and individuals that offer to buy structured settlements. When considering this option, keep in mind that buyers intend to make a profit out of this transaction. Therefore you must proceed with caution and consult your lawyer before signing any agreement. Generally, when you sell your structured settlement, you will receive far less than what your settlement is worth. If the benefits are greater than the risks, then you can choose this option with proper guidance from your attorney.
