When parties agree to resolve a lawsuit with a structured settlement, they negotiate a cash amount payable by the defendant in exchange for the plaintiff to withdraw the lawsuit. This money is then distributed as a series of periodic payments, usually financed through an annuity. In this article, we'll explore how structured settlements work and review some of the things you should consider when deciding to accept a structured settlement or a one-time payment if you win or resolve your lawsuit. Many people receive structured settlement annuities from an insurance company as a result of a personal injury or other lawsuit, such as wrongful death or medical malpractice.
If you find that your expenses increase while you wait for your first structured settlement payment or initial lump sum, you may want to consider pre-settlement financing options to help you. Unless financial difficulties are severe, most financial advisors recommend not charging annuities or structured settlements. Since the structured settlement annuity is essentially an income annuity, inheritance is treated as such. Secondary market annuities occur when a third-party company gives the agreement owner a lump sum of money for payment of the structured settlement.
To keep unscrupulous businesses at bay, most state laws also require that the transfer of settlement rights be in the best interest of the beneficiary. Those responsible for the wrongdoing may accept the settlement on their own, or they may be forced to pay the money when they lose the case in court. Typical settlement scenarios include personal injury cases, workers' compensation cases, medical malpractice, and wrongful death lawsuits. The key difference between adults and minors is that minors cannot control their settlement payments, so parents are in charge.
Laws to protect structured settlement holders ensure that they don't make hasty decisions that have long-term negative effects on their finances. When deciding whether to accept a structured settlement or a one-time payment, there are several factors to consider. First, you should consider your current financial situation and whether you need immediate access to funds. You should also consider any tax implications associated with accepting either option. Finally, you should consider any legal restrictions associated with selling your structured settlement payments. If you decide to sell your structured settlement payments, it's important to work with a reputable company that has experience in this area.
Make sure you understand all of the terms and conditions associated with the sale before signing any documents. It's also important to understand any fees associated with selling your payments and how much money you will actually receive after all fees are taken into account. Structured settlements can be an effective way to receive compensation for an injury or other legal dispute. However, it's important to understand how they work and what factors should be considered when deciding whether to accept a structured settlement or a one-time payment.
