Why Choose a Structured Settlement?

If you are about to, or have already, received a big judgment, you may want to consider getting a structured settlement rather than a lump sum payment from the judgment. Structured settlements offer several advantages over lump sum payments and may provide the beneficiary more peace of mind than a one time payment of a lump sum.

Customization

Structured settlements do not mean that the payment must be the same exact amount for a certain number of years. Instead, structured settlements can be used to meet your needs. You can opt to get a larger upfront payment now to pay off medical bills and legal expenses that were incurred and then receive regular payments for a number of years. As an alternative, you can choose to receive annual payments of a certain amount. Regular payments for a number of years are also available if this is to your advantage. Additionally, structured settlements can be organized in a fashion to keep part of the funds to only be available upon your death. This allows for a structure that can provide to your dependents. The settlement is structured to fit your needs, whatever they may be.

Predictability

Structured settlements provide predictable payments. They do not increase the amount of the judgment; they simply spread the payments out according to your instructions. If you have become disabled due to the cause of action that led to your judgment, structured settlements can help replace the monthly income you have lost. Additionally, income from many lump sum payments winds up in the stock market, which can be volatile and may cause the beneficiary to lose money.

Spontaneity

Unfortunately, it is not uncommon for a person who receives an unexpected large sum of money to waste the money quickly. The thought of being able to buy whatever they want can cause beneficiaries to act impulsively. Often the money is gone within a year. Structured payments can help avert this problem and make the judgment last for many years. This type of payment structure can provide a greater degree of peace of mind since you can depend on the money to be available when you need it.

Tax

Structured settlements are often placed in annuities. Depending on your state of residence, annuities may not be taxed at all or may be taxed at a reduced rate. Lump sum payments are almost always taxed at a higher rate. This difference in the amount of taxes that you pay can greatly affect the net amount of the judgment you receive after taxes.

Factoring

If you have received a structured settlement, but you now need more funds, you can use a structured settlement factoring approach to change your structured settlement into a lump sum payment. Factored structured settlement payments get the cash you need. This option may help you if you need more funds now, if your circumstances have changes, or your life expectancy has decreased. This option allows you to receive a large payment now in exchange for signing the structured settlement, or a portion of it, to a third party.

Posted in Factored Structured Settlement, Structured Settlement Benefits