What are Structured Settlements? History of Settlements

What is a Structured Settlement?

A medical claim against personal injury or asbestos disability is normally a lump sum settlement. When this amount is segregated into monthly payments for a life period, is called a structured settlement. Oher terms used for structured settlements are settlements. This facility is brought under Tort Law.

structured settlements

Structured Settlements Information

. Lump sum payment have the following problems

  • Dissipating sanctioned funds

A structured settlement is preferred over lump sum for the following reasons.

  • Payments will be useful for as monthly income for life, for children education, marriage function and other  future needs
  • These structured payments are free of Income-tax under Section 104(a)(2) of the IRS Code
  • It is an out of court agreement from insurance companies to the beneficiary against lumpsum payment 

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 implements them. These may be some differences in the judiciary, depends on the law of the country. Structured settlements are also called 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.

About Structured Settlements

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 adjusts to living with a disability but also to get used to having a lot of money.

What Types of Cases Are Eligible For Pre-Settlement Funding? by Joel L McLaughlin

Many people consider pre-settlement funding as an option when filing a lawsuit, but are unsure of whether their case qualifies. Is your case eligible for consideration to get a lawsuit loan? Here are some answers to the questions you may have.