Friday, 14 November 2014

What is Structured Settlement and How it Work

Understanding structured settlements and how they work


Structured settlements allow the defendant responsible for your injuries to pay your compensation over time, in regular instalments paid according to whatever timetable has been agreed. This can usually be determined by the plaintiff, so if you feel that monthly payouts are better than annual payouts then you can opt for this. Consider carefully how the instalments should be paid so that you gain the most benefit from them.

If a defendant can afford to do so, they may well make you an offer of a lump sun rather than a structured settlement. while this may seem tempting. you need to consider very carefully if this is really going to he to your advantage. Be honest with yourself and decide if you will realistically be able to manage such a large sum without squandering it all in a few short months. Not everyone is good at managing money. and if that sounds like you then structured settlement payments are a much safer option.

You should also consider the advantages over a settlement and structured settlements. Although there is no difference in the amount offered, there are tax considerations.

 A lump sum settlement immediately become subject to income tax, so you have to surrender your compensation before a large proportion of land revenue, you can even see the money in your bank account.

However, when you choose a structured settlement payments, your tax liability will be greatly reduced, because there are many provisions of the law in the case of tax-free settlement annuity.

 A clever lawyer on your side, you may not even he was able to negotiate an agreement to completely eliminate your tax liability.


Another factor that has an impact is your health. If you are very poor physical condition or have been diagnosed as terminally ill. Then a lump sum may be the best, because it means you can enjoy the money, but you can still do so. However, it may be possible to negotiate a structured settlement payment you receive after the death of your family, but this is complicated agreement to negotiate.

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