If you’re considering a structured settlement, it’s important to understand both the pros and cons before making a decision. A structured settlement is a financial or insurance arrangement in which a claimant agrees to receive periodic payments, rather than a lump sum of cash. Structured settlements are typically used in cases involving minors, workers’ compensation cases, and mass tort litigation.
In this article, we’ll discuss the pros and cons of structured settlements so you can make an informed decision about what’s right for you.
A structured settlement is a negotiated financial or insurance arrangement in which a claimant agrees to resolve a personal injury claim by receiving periodic payments, rather than a lump sum of cash. Structured-settlements are typically used in cases involving minors because courts generally must approve any settlement on behalf of a minor.
Structured-settlements are also used in workers’ compensation cases and have been increasingly used in mass tort litigation such as asbestos and breast implant claims. In some cases, a structured settlement may be ordered by a judge as part of a personal injury lawsuit.
There are several advantages to structured-settlements, including the ability to control how and when you receive payments, the potential for tax-free payments, and the peace of mind of a guaranteed stream of income. However, there are also some potential disadvantages to consider, such as the possibility that you might not be able to get a structured settlement, that you might have to wait a long time to receive your payments, and that you might have to pay taxes on the money you receive.
Pros of structured-settlements
A structured settlement can offer a high degree of control over how and when you receive payments. This can be beneficial if you have specific financial needs or goals that you want to meet. For example, you can structure your settlement so that you receive a lump sum of cash up front, followed by periodic payments over time. This can allow you to use the lump sum of cash to pay off debts, cover medical expenses, or make other major purchases.
Another advantage of structured-settlements is that they are often tax-free. This means that you will not have to pay taxes on the money you receive from your settlement. In addition, structured-settlements can help you avoid the fees associated with traditional investments.
Finally, structured-settlements can offer peace of mind by providing a guaranteed stream of income. This can be beneficial if you are concerned about your ability to earn an income in the future.
Cons of structured-settlements
The disadvantages of structured-settlements should be considered before agreeing to this type of financial arrangement. Specifically, structured-settlements may not be available in all cases, you may have to wait a long time to receive your payments, you may not receive the full amount you are owed, you may have to pay taxes on the money you receive, and you may not have the same level of customer service as you would with a lump sum payment.
One disadvantage of structured-settlements is that they may not be available in all cases. For
example, if you are the victim of a car accident, the other driver’s insurance company may not offer a structured settlement. If you are entitled to workers’ compensation benefits, your employer’s insurance company may not offer a structured settlement. In addition, if you are involved in mass tort litigation, such as asbestos exposure or defective pharmaceutical drugs, the companies involved in the litigation may not offer a structured settlement.
Another disadvantage of structured-settlements is that you may have to wait a long time to receive your payments. For example, if you settle your workers’ compensation claim today, you may not receive your first payment for several weeks or months. In addition, if you are due periodic payments over a long period of time, such as 20 years, you will have to wait a long time to receive the full amount of your settlement.
A third disadvantage of structured-settlements is that you may not receive the full amount that you are owed. For example, if you are awarded $100,000 in damages in a personal injury lawsuit, but agree to accept $50,000 in periodic payments over 10 years as part of a structured settlement, then you will only receive $50,000 of your award. In addition, if you die before receiving all of your periodic payments, your heirs will only receive the payments that have been made up until that point and will not receive the remaining balance of the award.
A fourth disadvantage of structured-settlements is that you may have to pay taxes on the money you receive. For example, if you settle your personal injury claim for $100,000 and agree to accept $50,000 in periodic payments over 10 years as part of a structured settlement agreement with an insurance company
Are structured-settlements right for you?
There is no one-size-fits-all answer to the question of whether or not structured-settlements are right for you. The best way to determine if a structured settlement is right for you is to evaluate your needs and objectives. If you are considering a structured settlement, ask yourself the following questions:
What are my goals?
Do I need a lump sum of cash now, or can I wait to receive periodic payments?
How much money do I need?
How long do I need the payments to last?
Am I comfortable with the idea of not receiving the full amount of money I am owed?
Am I willing to pay taxes on the money I receive?
Do I need customer service assistance in setting up my structured settlement?
By asking yourself these questions, you will be able to better determine if a structured settlement is a right option for you.
How to get started with a structured settlement
Getting started with a structured settlement is not as complicated as it may seem. There are a few steps that you will need to take in order to ensure that you are getting the best possible outcome for your individual case. The first step is to speak with a financial advisor to see if a structured settlement is right for you. It is important to have a clear understanding of what a structured settlement entails and how it can benefit you before making any decisions.
The second step is to consult with a lawyer to discuss the legalities of structured-settlements.
This is an important step in order to ensure that you are fully protected and that all of the paperwork is in order.
The third step is to find a company that specializes in structured settlements. This will help you set up your payments and make sure that everything goes smoothly.
The fourth step is to keep track of your structured settlement payments and budget accordingly. This will help you make sure that you are staying on track and that your payments are working for you.
The fifth and final step is to stay in touch with your financial advisor and lawyer. This will help you ensure that your structured settlement is still meeting your needs and that you are getting the most out of it.
In conclusion, a structured settlement may be the right choice for you if you are looking for a way to control how and when you receive payments, the potential for tax-free payments, and the peace of mind of a guaranteed stream of income. However, there are some disadvantages to structured settlements that you should be aware of before making a decision. These include the fact that they may not be available in all cases, you may have to wait a long time to receive your payments, and you may have to pay taxes on the money you receive. If you decide that a structured settlement is right for you, there are a few things to keep in mind when choosing a structured settlement company. Make sure to ask about customer service assistance and compare different companies before making a decision.
