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Understanding Structured Settlements and their
Advantages
by Josh Murray
Put in simple terms, a structured settlement is merely an agreement
that’s reached between a plaintiff and defendant that outlines the
flow of payment that the plaintiff receives, due to injury. These
payments – which are made over a specified period of time – do offer
some advantages to the recipient and are advocated by many legal
professionals, since they provide more benefits over time, when tax
rates are factored in for consideration.
When the payment system is set up, it can be customized according to the
needs of the recipient and is issued through a stable financial
institution. In cases where there will be ongoing medical expenses
and/or living expenses that will be covered by such a settlement, it’s
important to be comfortable with the experience and the history of
success that the company offers.
Among the many advantages of a structured settlement is the fact that
the income that’s generated from this type of agreement is not
included as part of the recipient’s annual gross income. In this way,
the amount of dollars that are extracted upon filing a tax return
doesn’t have to be adjusted upward due to the excess income that is
provided through a structured settlement.
Since the payments that are made through a structured settlement are
guaranteed by some of the largest and most highly acclaimed insurance
companies in America, there is a very low risk factor that’s involved
in receiving an uninterrupted cash flow once a settlement has been
reached. This, too, is a benefit, since the discontinuation of payout
can be devastating to an individual or their family.
In contrast to the interest that’s acquired through CDs or Municipal
Bonds, monies that are accrued through a structured settlement are not
factored into the calculation of Social Security benefits. That
translates into a greater monthly benefit for those who are collecting
payments through the Social Security Department, which can make a huge
different to those who are on such a fixed income.
Depending upon the level of disability, structure settlements can be set
up to last for the lifetime of the recipient. These payments are
guaranteed and can be customized to be made on specific dates or
increased on a yearly basis in order to offset the cost of living, as
well as factoring in any other special needs that may become apparent.
For those who suffer from credit problems or lose assets as the result
of a divorce, the monies that are siphoned through a structured
settlement cannot be considered as part of the financial scenario of the
individual. Creditors are not allowed to claim any portion of the funds,
and a structured settlement is not considered common property.
In addition to these, there are a number of other benefits that are
intrinsic to a structured settlement, only some of which are geared
toward the plaintiff. Benefits are also enjoyed by the attorneys and
financial institutions that back such settlements. For further
information, speak with your personal legal representative or consult
one of the major online search engines.
About the Author
Josh Murray is a contributing writer to http://www.structuredsettlementinfo.info,
a site that provides news and information on structured settlements. |