A medical claim against personal injury is normally a lump sum settlement. The facility to pay the lump sum over a period of time is called structured settlement. Structured settlements are also called as periodic settlements. This facility is brought under tort Law.
Structured Settlements Information
. Lump sum payment have the following problems
- Dissipating sanctioned funds
Structured settlement is preferred over lump sum for the following reasons.
- Payments can be scheduled for future needs
- Payment are free of Income tax under Section 104(a)(2) of the IRS Code
- It is an insured agreement from insurance companies
This facility is utilized in Canada and USA since 1970 as an alternate method for Lump Sum Payment. This facility is brought under tort Law and countries like Australia, and England also implement them. These may be some differences in the judiciary depending on the law of the country . Structured settlements are also called as periodic settlements. A structured settlement incorporated into a trial judgment is called a periodic payment judgment.”
While entering a structured settlement agreement take care of the following points
Commissions: Do not pay excess commissions
Overstated Value: Overstating the value of structured settlement will decrease the dollar value than the value agreed upon.
Life expectancy: Upon death the settlement the payment will cease if not properly protected in the agreement.
Protect the annuity payments against bankruptcy. Choose one or more insurance companies for larger payments to protect annuity against this situation.
Before 1982, cash paid out resulting from legal action stemming from accident, injury, or workmen’s compensation cases were for the most part paid as a lump sum. The PeriodicPayment Settlement Act of 1982, enacted by the legislature, amended the American tax law to recognize and inspire the utilization of structured settlements as a method of payment in personal injury situations. This necessitated that the victim not only adjust to living with a disability, but also to get used to having a lot of money.
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