What Is A Structured Settlement

What Is A Structured Settlement

 

Sometimes when a complainant settles a case expecting a large amount, the defendant, the complainant’s attorney, or a financial planner consulted in association with the settlement, will propose paying the settlement in short installments with a less amount to be paid in every interval, settlement paid in this manner it is called a “structured settlement”.

What Is A Structured Settlement

What Is A Structured Settlement

A structured settlement can be choosen by a party in any of the schedule that suits them. For example,
party may choose any type of time period they prefer, let it be a period of one yer (annually ) or a period of five years called lump sum. Often the structured settlement will be created through the purchase of one or more annuities, this procedure guarantees the payments to be made in future for sure.

There are many benefits of a structured settlement, minors may get benefited from a structured settlement, in a way like settlement which provides for certain costs during their youth, an additional disbursement to pay for college or other educational expenses, and then one or more disbursements in adulthood.

An injured patient or a casualty who has long-term special needs may get benefited from having periodic lump amounts to purchase medicines for him or her and to purchase special vehicles.
In some situations, it will be better for a severely disabled complainant to set up a special needs trust, rather than entering into a lump sum or structured settlement. So the guardians of the complainant with specific disability must consult a financial a settlement adviser in this direction to get benefited from it to a large extent.

One significant advantage of a structured settlement is the tax avoidance.  With a necessary set-up, a structured settlement may significantly reduce the complainant’s tax obligations as a result of the settlement, and may in some cases be tax-free.

A structured settlement can protect a complainant from having settlement funds dissipated, when they are necessary to pay for future care or needs.  Sometimes what happens, you don’t have the required amount as a bank balance to be paid if the complainant is demanding much of the sum and even your relatives and friends are not willing to share their wealth with you at any sort of conditions and even a large settlement can be rapidly exhausted. In these type of cases, a structured settlement can help protect a defendant from himself.
 

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Posted in Law