Structured settlements are an innovative method of compensating injury victims. Encouraged by the U.S. Congress since 1982, a structured settlement is a voluntary agreement between the injury victim and the defendant.A structured settlement is a periodic payment plan, usually arranged between a claimant and a defendant in a tort suit. For example, a structured settlement might be arranged between a person who has been injured and the person who caused the injury (or often times, their insurance agency)That's why, structured settlement is an agreement that can satisfy the needs of both parties.Under a structured settlement, the injury victim doesn't receive compensation for his or her injuries in one lump sum. Rather, he receives a stream of tax-free payments tailored to meet future medical expenses and basic living needs.A structured settlement may be agreed to privately (for example, in a pre-trial settlement)or it may be required by a court order, which often happens in judgments involving minors.
Historically, damages paid because of an injury lawsuit came in the form of a single lumps sum. This kind of payment, especially in catastrophic injury cases, often placed the injury victim (or family) in a difficult financial position. With the victim focused on adapting to a new lifestyle, there often was not the time to manage large sums of money. That can lead to serious trouble. A person who loses funds intended to cover a lifetime of medical care runs the risk of losing medical care and independence. They also risk winding up on public assistance.That's why, in 1982, a bipartisan coalition of legislators in Congress came together to pass legislation that amended the federal tax code. Their action, The Periodic Payment Settlement Act of 1982 (Public Law 97-473), formally recognized and encouraged the use of structured settlements in physical injury cases.
Every structured settlement involves a unique negotiation between claimant and defendant. The amount of each payment and the frequency of payments can be decided in any manner if it is agreeable to both parties.Some examples of common methods of distributing payments in a structured settlement include annual payments in which the claimant receives a small sum every year for a certain period of time -- often times, his or her lifetime. This can be a good option for claimants whose medical needs are expected to stay relatively stable over a long period of time. Another common method is to disburse a larger lump sum every few years.This can be a good option for people who may nIn any physical injury case, the plaintiff and defendant negotiate issues such as the victim's medical care and basic living and family
needs. Oftentimes, one side (or both) will bring in an expert, such as a structured settlement broker, who provides calculations on the long-term cost of these needs. When there is agreement on the benefits due to the injury victim (which can happen before, during or after a lawsuit), the defendant will agree to fund a stream of payments that meet these needs. The defendant then assigns this obligation to an experienced third party, such as life insurance company, that funds the damage payments with an annuity. An annuity has been the preferred way of funding because of its pricing and flexibility. An alternative is a trust fund which invests only in United States Treasuries. As these issues involve complex calculations, you should always consult your attorney and a structured settlement professional.
needs. Oftentimes, one side (or both) will bring in an expert, such as a structured settlement broker, who provides calculations on the long-term cost of these needs. When there is agreement on the benefits due to the injury victim (which can happen before, during or after a lawsuit), the defendant will agree to fund a stream of payments that meet these needs. The defendant then assigns this obligation to an experienced third party, such as life insurance company, that funds the damage payments with an annuity. An annuity has been the preferred way of funding because of its pricing and flexibility. An alternative is a trust fund which invests only in United States Treasuries. As these issues involve complex calculations, you should always consult your attorney and a structured settlement professional.
Structured settlements can be ideally suited for many types of cases, including:
#Persons with temporary or permanent disabilities;
#Guardianship cases that may involve minors or persons found to be incompetent;
#Workers compensation cases;
#Wrongful death cases where the surviving spouse and/or children need monthly or annual income; and
#Severe injury, especially with long-term needs for medical care, living expenses and support of family.
If you are now involved in lawsuit then you should consider structured settlement because:
#Relieve the financial pressures of medical expenses and living needs;
#Meet long-term rehabilitation or permanent care facility expenses;
#Provide for the future costs of college funds, retirement, down payment on a
#home, or mortgage payment; and
#Provide long-term financial security.