What Exactly is a Structured Settlement?

Many people have heard of structured settlements, but they aren’t sure what they actually are. There is a lot of misinformation out there regarding structured settlements, and it is easy to be confused about how these types of settlements work and why you might choose to use them. Here is some more information regarding structured settlements, including some of the pros and cons of this form of payment.

What is a Structured Settlement?

A structured settlement is when you receive your lawsuit settlement money in installment periods, rather than in one large lump sum. Choosing to receive your money as a structured settlement will not decrease or alter the amount of money the judge or jury awarded you in your lawsuit. Instead it will ensure that you receive your money over a specific period of time.

How Would I Get a Structured Settlement?

This is how you would end up receiving a structured settlement. You would first have to be awarded some form of financial compensation in a lawsuit. In general, settlements are awarded to plaintiffs who can prove they suffered real and permanent injury or mental anguish, and that their pain was the direct result of another person’s actions. These actions can be deliberate or they can be accidental. The point is that it is someone else’s fault that you were injured. It is also possible for your injury to be directly caused by a corporation or government body. An example of this would be when an insulation company is sued by a worker in one of their plants because they were exposed to materials containing asbestos and developed lung cancer. The worker in this case would be entitled to some amount of compensation for their pain and suffering.

Why Choose a Structured Settlement?

Once you have brought a suit against the company or person who is responsible for your injury and have won the case, the judge or jury will decide to award you a specific amount of money. For this example we will say that you have been awarded 2 million dollars to help pay your medical bills and loss of employment. You, as the plaintiff, will have two choices when it comes to how you will be paid your $2 million. You can ask to receive the entire sum in one large payment. This would result in $2 million being transferred into your possession in one action. Or you can choose to be paid your reward using a structured settlement.

The structured settlement would mean that you would get your $2 million delivered to you over a set period of time. This period of time can be very flexible and based on your specific needs. For example, you could set it up so that you receive $100,000 per year until the money is gone. Or you could set it up so that you receive $1000 per month until the money runs out. You would have to decide which specific option is the best for your situation, but once you create a structured settlement it cannot be changed.

Pros and Cons

One of the benefits of choosing a structured settlement is that you will receive income over a long period of time. This can be very helpful if you are the type of person who would spend their entire $2 million in only a few months. However, once a settlement is in place you cannot alter how much you will get each month or year. So if you decide you need more money at any given time you would have to use a structured settlement factoring transaction, which means you would have to sell off part of your reward to get the rest in one lump sum.

 

 

Tags: Financial services, Law, Lawsuit, Lump sum, Money, Structured settlement

Category: Business