Fri. Jun 2nd, 2023

Structured Settlement Negotiations

Structured settlements are payments determined through negotiations between the plaintiff and defendant.

Structured settlements are a legal solution to lump sum awards in personal injury, workers compensation, medical malpractice and wrongful death cases. They can be an invaluable tool in negotiation when the underlying damages are substantial.


Taxes can be an integral factor in structured settlement negotiations. A qualified tax attorney should help you avoid tax penalties, as well as guarantee that your structured settlement is constructed correctly.

Structured settlements in the US are generally tax-exempt under US law, provided they are paid from a qualified funding asset like an annuity or Treasury bond. However, there are exceptions to this rule which could make parts of a settlement taxable, such as punitive damages or interest that accumulates on the money.

Structured settlements offer plaintiffs the advantage of receiving a large initial payment and smaller installments over time, which can enable them to pay off debt and purchase necessary items. Furthermore, plaintiffs have the option of receiving larger payments for extraordinary expenses like college tuition or a new car.

Though structured settlements may be more challenging to value than lump sum payments, they can help increase the chances of settlement. This is because plaintiffs will assign a financial value to tax-exempt structured payments which are harder to estimate than lump sum amounts.

Another advantage of a structured settlement is its protection against future inflation or economic downturns. This is because periodic payments can be invested in bonds or other secure investments for added security.

Structured settlements can also be structured so plaintiffs and their heirs receive payments over time instead of just one lump sum. This is especially helpful if the plaintiff plans on living a long time or requires extensive medical care in the future.

Finally, structured settlements can also help reduce court backlogs. If more plaintiffs choose to utilize structured settlements, courts will be able to handle cases much faster.

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In the United States, structured settlements resulting from personal injury lawsuits are exempt from income taxes if paid from primarily exempt investment vehicles. This is because the federal government views these payments as restorative rather than income. Furthermore, any proceeds generated from selling these settlements also remain exempt.


Structured settlement negotiations, whether you are the victim or defendant in an injury lawsuit, can make the process go more smoothly. An experienced attorney can guide you through determining how much money is appropriate for your circumstance as well as which options exist to get a fair settlement.

Structured settlements are a popular way for plaintiffs to receive compensation in personal injury cases. They provide victims with an ongoing stream of income while also offering tax advantages.

Negotiated settlements between parties and submitted to the court for approval become effective. Settlements may take the form of a lump sum payment, monthly disbursements, or monthly annuity contracts.

One major advantage of a structured settlement is that it does not count as income for tax purposes, regardless of how the money is invested. This eliminates any burden on payees to repay funds to either the IRS or their state, nor do they need to worry if these payments will impact eligibility for means-tested benefits such as Social Security Disability or Medicaid.

Though structured settlements may appear beneficial to accident victims, they may come with negative repercussions. Structured settlement terms may be stricter than lump-sum payout terms, meaning payees may not have as much freedom to access their funds or reduce debt owed as with a lump-sum payment.

Structured settlements often provide for monthly payments to be received for an agreed-upon period, typically 20 years or longer. These payments can be reduced or increased according to a plaintiff’s needs and objectives with their settlement.

Selecting the ideal structured settlement plan for your case depends on several factors, including your current financial situation, the amount of damages received and how much money you wish to save or invest for the future. Your lawyer can work with you to create a strategy that meets all your needs while still granting financial compensation for your injuries.

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Freedom of Design

When opting for a lump sum or structured settlement, you have the freedom to customize the payments. This flexibility can be especially useful when dealing with large sums of money; for instance, you could set aside part of it as a down payment on a home, car or other long-term investment; another significant portion could go towards paying off past due bills and/or meeting unexpected expenses.

Structured settlements are becoming an increasingly important aspect of the law, but they also present unique difficulties for plaintiff attorneys trying to resolve their clients’ claims. Estimates suggest that up to 30% of all personal injury lawsuits involve some form of structured settlement offer.

Structured settlements come in many forms, from one-time payments to regular payouts over a recipient’s life. Some provide annual income while others add extra amounts for unexpected expenses like college tuition or even retirement funds.

When selecting a structured settlement, your personal preferences should be the ultimate factor. After considering your budget and objectives with the guidance of an experienced legal team, you can identify which payment plan best meets your needs.

In the end, structured settlements are your best bet for getting what you’re owed and relieving you of any pain or frustration associated with dealing with a defective product or negligent party. They also have the potential to resolve past issues that stall negotiations, while demonstrating good faith bargaining – an essential legal standard in many states.


Liquidity is an integral factor in any settlement negotiation. It measures an asset’s ease of conversion into cash as well as its capacity for meeting future obligations like paying regular bills or debt payments.

A company’s liquidity ratio indicates whether it has enough assets to cover its current liabilities, or if it needs to borrow money from the market in order to fulfill those commitments. Typically, a high liquidity ratio indicates more current assets than long-term obligations for a firm.

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Businesses that generate a lot of cash from their products or services often have high liquidity levels. Furthermore, these businesses tend to have more short-term debt than long-term obligations.

Some businesses, particularly start-ups, tend to have less liquid assets due to inventory that takes a while to sell. Furthermore, these firms usually possess fixed assets which cannot easily be converted into cash such as buildings or equipment.

Liquidity also refers to an asset’s capacity for being sold quickly and at a fair price. If it takes too long for an asset to sell, its liquidity may suffer since finding a buyer could prove challenging.

However, markets have been created specifically to make illiquid assets more liquid, such as art and non-fungible tokens (NFTs). Through these marketplaces, people can sell an asset that may not have much liquidity without waiting months to receive their money back from the sale.

When engaging a structured settlement investor, it is essential to take into account the liquidity of the investment being discussed. Doing this will enable you to determine if it meets your objectives.

Liquidity can affect how much money you have available for unexpected expenses like car repairs or vacations. In such cases, a structured settlement may offer you peace of mind and protect you from spending more than what you have on your own.

Jeffrey Augers
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By Jeffrey Augers

Jeffrey Augers is a highly skilled and experienced financial analyst with over 12 years of experience in the finance industry. He has a proven track record of delivering exceptional financial insights and recommendations to clients, empowering them to make informed decisions and achieve their financial goals. Jeffrey holds a Bachelor's degree in Finance from the University of Michigan, and an MBA from the Wharton School of Business.