Well, it might be possible that the only exposure you have with structured settlement is the TV ad hawking immediate access to your money. There may be many instances where you will be repeatedly told that it is your money, and that you should have quick access to it. You will be told to cash in your structured settlement and get all the money immediately.
These are factoring companies which pick up structures at a discount from victims who are receiving structured payments but due to some circumstances, they need cash now. Now most of the courts have made it mandatory to have a court hearing before they could buy such structure.
A structured settlement is an annuity where a claimant agrees to receive periodic sum of money for a particular number of years on a regular schedule for resolving a claim related to personal injury or other. Regular payments are made in structured settlements to suit the claimant’s future needs and goals. If you are one of those who looks for a regular money stream instead of lump sum payments, then structured settlements are ideally made for you.
There are future needs like medical needs and others which will be taken care of by structured settlements. There are many reasons why people receive structured settlements. One of the major cases is that of a personal injury. The plaintiff in this case settles a claim for a large sum structured monthly or annually.
These payments definitely help to cover up the medical expenses incurred by the plaintiff to get perfectly alright. Another case of a structured settlement may arise in case of a wrongful death wherein the family of someone whose death was the subject of wrongful death claim might be compensated.
Another instance may arise in case of the compensation given to the workers injured during the normal course of job to recover completely from the injuries.
Evolution of Structured Settlements- The Key to Financial Security
For many years it was happening that most of the plaintiffs received a large lump sum amount as compensation in case of personal injury. There was a great deal of benefit in this because the plaintiff could pay for the medical expenses and other things but it carried a disadvantage too as the plaintiff didn’t know what to do with such a large amount.
So, the government amended the law and slowly came the era of structured settlements where the claimant received money at regular intervals and authorities even amended the federal tax code to provide legal incentives for the same. It stated that the payments be offered at regular intervals and these payments should be exempt from tax both at the federal and state level.
Here are some of the most attractive advantages of structured settlements.
Advantages of Structured Settlements
- Get better savings with Structured Settlements
The capital gains or the interest accrued from structured settlements are exempted from both federal and state taxes thereby giving you better savings.
- Enjoy the convenience that comes along with structured settlements
There are a lot of ways you can schedule your payments; they can scheduled over any length of time. You can begin your payments instantly, can be deferred as per your will, and even can include lump sum payouts also.
- Fight the recession with structured settlements
Annuity payments in structured settlements are not dependent upon the financial markets or the state of economy. Also the payments are being guaranteed by the insurance company that issues the contract.
- In case of any mishaps, beneficiaries still get the payment
There is no need to worry in case of the recipient’s premature death; the beneficiaries still get tax-free payments in the future.
- Minors get taken care of due to continuous payment schemes
Prior to the use of structured settlements, whenever there was a case of injury or lawsuit involving minors, the defendant would give a lump sum amount to the minor’s parents or guardian. But many of the adults would use this money without any discretion and spend it on activities which were not prescribed by the court. But with the structured settlements, it was ensured that minors got money for long term necessities like food, medical care, shelter, etc.
- Reduces the risk for both the parties
Structured settlement reduces the risk for both the parties involved. If you are a defendant, then structured settlement reduces your financial liability. Also, there is a lot to save on the legal expenses which would have occurred otherwise. If you are on the receiving end of the structured settlement then, there is a lot to gain with regular payments. These payments can be used to purchase any specialized medical equipment or modified vehicles.
- Less chances of being duped by a conman
With structured settlements you can avoid being duped by greedy people. Most of the victims of these cases are senior people who are having a lot of cash with them. Regular and small installments would keep these greedy people away as there would not be a huge sum of money to grab their attention. Also, a beneficiary has a great deal of advantage in structured settlements as the money doesn’t get dissipated fast as may be the case in the lump sum amount. All the future needs will be easily catered to along with the safety of your money.