People who have experienced lawsuits, personal injury, a workman’s compensation case, or even were lucky enough to win the lottery have been faced with the decision to have a structured settlement. A structured settlement is an arrangement where the person who is receiving money will get regular payments over the course of several years or for the rest of their life depending on the case. Once the terms of the structured settlement are in place, they cannot be changed, meaning that you have to think very hard about your decision. That is why it is important to work with your financial advisor, as well as a lawyer during the process of getting a structured settlement. If you agree on a settlement, and later on in your life you do not want to receive the payments monthly, you can sell your settlement for one large sum. People do this for many reasons, whether it is to pay off a debt, or purchase a home. They must go through the courts and structured settlement companies to accomplish this.
A lot of the cases that end up in structured settlements actually never make it to trial. This is because both parties reach a settlement agreement early on in the litigation process of the case. Usually, it ends with the person who has brought on the lawsuit to stop pursuing any further legal action in exchange for receiving a payment from the defendant’s insurance company.
Having a structured settlement can give a person peace of mind knowing that they will receive their monthly payments on time every month for the period of time that was predetermined. You will be able to budget accordingly each month, knowing that you will have that source of money. This can teach financial responsibility, as well as ensure that medical expenses will always be paid for.
Another reason people will get the structured settlement option rather than the lump-sum option is because it is tax-free. If you get a large sum of money up front, it is considered income. If you are receiving this money over time, then it is tax-free. This is because someone else, like an insurance agency, is in control of when the recipient gets their money. The recipient does not control all of the money; rather, it is handled by someone else until the person receives their set amount of money each month.
Choosing the structured settlement plan will be beneficial to the recipient in the long run. It is very tempting to spend a large sum of money on anything that you want because it seems like it will never run out. However, if you have a large sum of money and you spend it all, there is not a backup plan. The money is gone, and there are no more monthly payments coming in. So, if a medical emergency, or any other occasion presents itself, you will not have that money that was given to you for just these occasions.
No matter what the reason for receiving a structured settlement is, it is important to explore your options. More often than not, a structured settlement over the years will be your best bet, but there are other options if that does not work. Make sure to talk to your financial advisor, lawyers, or anyone else involved before pursuing any action with your structured settlement.