What is a Structured Settlement?
When a civil, personal injury, or wrongful death lawsuit is settled, a plaintiff’s settlement monies can be paid out in either a lump sum settlement payment or as a series of payments made over a designated amount of time. A settlement that is paid out periodically is known as a structured settlement.
A structured settlement is a tax-exempt settlement design ideally arranged by an experienced structured settlement planner.
What are the advantages of a structured settlement plan?
Why opt for a structured settlement over a lump sum payment? What advantages do structured settlements offer over one-time, lump sum payments? First off, plaintiffs benefit from the financial security that comes with guaranteed, long term income. Set periodic payments over a designated timeframe leave plaintiffs free of the pressures associated with large-scale money management.
Another advantage associated with structured settlements is that the plaintiff’s settlement payments are completely exempt from federal and state income tax. They can be backed by traditional annuities, or by tax-free investment accounts. Speak with your settlement planning consultant to determine which tax free design is best for your client. Additionally, the payments from a structured settlement can be tailored to fit the exact present and future needs of the plaintiff.
Structured settlements are a flexible financial planning option that allow for funds to be received when they are needed most. For example, plaintiffs can accept a large initial sum to help cover legal fees and other immediate needs, and then opt to structure the remainder of their settlement monies after that. Payments can also be set to increase or decrease as time passes, or even delayed until after the plaintiff has retired.
Why you should consult with a professional settlement planner
It is imperative that you consult with a professional before opting for a structured settlement for your client, as professional settlement planners have the comprehensive expertise and background to best serve the needs of your client. Engage with a structured settlement planner as early on as possible in a given case. A settlement planner will take into account any treatment plans required, bankruptcy concerns, any outstanding liens that may be in place, or any government assistance the plaintiff may require. If you want someone who takes all pertinent details into account and ensures the selection of a plan with your best long-term interests in mind, you’re going to want an experienced structured settlement planner in your corner.