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Understanding Structured Settlement and its Potential Effects
from:If you are in the middle of having a case settled and your lawsuit shows strong signs of winning against the defendant, there’s a great need for you to know what structured settlement is about.
STRUCTURED SETTLEMENT EXPLAINED
A structured settlement always begin with a lawsuit being filed and the plaintiff (you or the person who filed charges) winning the case. The defendant may be required by the court to pay a certain amount of money to the plaintiff for physical, emotional damage et al.
Now, regardless of who proposes the idea, structured settlement is usually an option that’s brought up when the defendant is obliged to pay for damages cost to the plaintiff. A structured settlement would allow the defendant to set up a payment schedule rather than paying with just one lump sum.
More often than not, structured settlements involve the purchase of annuities to ensure that the defendant would be able to fully comply with his future obligations.
LAWS REGARDING STRUCTURED SETTLEMENT
A structured settlement must always be amenable to both parties. If the plaintiff is completely against the proposal, the defendant may have no choice but to give in to the plaintiff’s demands as he usually has all the rights to call the shots in this situation.
The terms and conditions must be amenable to both parties as well. It is up to the plaintiff and defendant – and their respective attorneys of course – to work out the payment schedule and details. Some parties, for instance, would prefer if the structured settlement would require monthly payments while others would prefer if a lump sun is given every two years or so.
Approximately two-thirds of the state has very specific laws that prohibit people from selling their structured settlements. So make sure that you do not violate any laws when you consider selling your structured settlement.
BENEFITS OF STRUCTURED SETTLEMENT
Tax Avoidance – If your structured settlement is being handled by a lawyer with considerable expertise in this field, rest assured that you can enjoy tax reductions at the very least. As for the best-case-scenario, there’s always a chance that you can enjoy a tax-free structured settlement!
Continuous Income – If you have been incapacitated in some way by the defendant, preventing you from being employed, a structured settlement could easily serve as your income for the time you need to fully recuperate from whatever injuries you have sustained.
Self-Protection – If you have a tendency to overspend, a structured settlement would prevent you from wasting your money as it only gives out small, scheduled payments. If you also find it particularly hard to say no to those who are asking for a little too much help when they learned of your unexpected windfall, be glad that your structured settlement is preventing you from falling for their traps!
DISADVANTAGES OF STRUCTURED SETTLEMENT
If you need a huge sum of money now, the way structured settlements are set up would naturally hamper you from gaining the total amount of your money. If you are good with money as well, a structured settlement would also prevent you from making better use of your money since a smart investment promises better returns than what a simple annuity could ever offer.
OTHER GENERAL TIPS
Make sure that the structured settlement is handled by a neutral party.
Keep in mind that laws on structured settlement would change if you live in a community property state.
Be on guard against lawyers who indulge in self-dealing without informing the parties involved; you never know when they might turn on you next.
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