What is a Structured Settlement?
Structured settlements are agreements reached among you, L&I and your employer to resolve the non-medical portion of your worker’s compensation claim. Through these payments, you’ll gain tax-exempt security for years into the future.
Structured settlements have been widely disapproved of by organized labor and other advocates for injured workers, yet they appear to be on the cusp of being eliminated in Washington State.
What is a structured settlement?
Structured settlements are a way for injury victims to receive compensation in an ongoing stream of tax-exempt payments that cover future financial needs. They may be awarded as the result of a court judgment or agreement between plaintiff and defendant, commonly used in medical malpractice cases, wrongful death suits, and for those who have suffered injuries that impact their ability to work or function normally.
These payouts can last a lifetime, making them especially helpful to injured victims who require financial support to sustain themselves throughout the rest of their lives or provide for loved ones in case they pass away prematurely. Furthermore, accidents provide victims with an easier way to manage their money and prevent becoming indebted.
When seeking a structured settlement, there are several elements to consider. You should first decide if the payout should be in a lump sum or over multiple regular payments.
Lumping together an initial lump sum payout is often the preferred choice, though it is not necessary. Some plaintiffs actually prefer starting with a larger payment in order to cover immediate practical needs like making their home wheelchair-accessible or purchasing reliable transportation.
Although an initial lump sum can be a welcome relief to those facing financial difficulty, those with access to large sums of money could easily become irresponsible and spend it on questionable investments or luxury items. Therefore, selecting an established investment company with an A+ rating and backing from another firm in case anything goes awry with the settlement is critical.
Funds can also be put to good use in an investment portfolio. Ideally, this should be one that generates income by earning interest and dividends.
Additionally, make sure you select a life insurance policy with adequate coverage to reduce the likelihood of not receiving your payout. Furthermore, check with your state’s Insurance Guarantee Fund to guarantee coverage in case an insurer fails.
How do I get a structured settlement?
If you have won a lawsuit and been awarded a substantial sum of money, you may be wondering how to receive it. Many plaintiffs who receive settlements for personal injury, wrongful death, and workers’ compensation cases receive either lump sum payments or regular tax-exempt monthly payments called structured settlements.
Your decision whether or not to accept a structured settlement depends on several factors. We suggest consulting an attorney who specializes in workers’ compensation law before making your final decision and accepting the offer presented to you.
Before agreeing to a structured settlement, you should assess if there are any outstanding disputes in your case that need resolution. It may be beneficial to settle those claims without spending excessive funds on attorney’s fees and expenses.
Another advantage of a structured settlement is that it safeguards your rights to future medical treatment for your work injury. Unfortunately, many work injury claims cannot be reopened if conditions have worsened due to insurance company or employer refusal to cover additional expenses.
Structured cash settlements can be an ideal choice for many injured individuals as they provide a predictable source of income over time or for life. This provides financial security and helps you steer clear of impulse purchases or taking on debt that you cannot afford to repay.
Be aware that structured settlements are inflexible. You cannot alter the payment schedule, accelerate or assign payments to another individual and you cannot even ask your annuity company to sell your policy for immediate cash.
RSL Funding, a trusted structured settlement buyer, can assist you in quickly and painlessly selling your payments so that you can reap the rewards of your award sooner rather than later. They provide all the information necessary for making an informed decision about selling your structured settlement and annuity payments so that you are in a position to take advantage of any monetary awards sooner.
What are the benefits of a structured settlement?
If you are involved in a personal injury case, have recently been awarded a wrongful death settlement, or have received workers’ compensation benefits, then structured settlements could be available to assist with your financial obligations. These payments are often tax-exempt and can be structured in many different ways to best fit your requirements.
One of the primary advantages of a structured settlement is its capacity to provide long-term financial security for you and your family. Aside from being free from taxes, these settlements also serve as insurance against catastrophic events like losing a job or becoming seriously injured in an accident.
To maximize your monthly structured settlement payment, an insurance company will determine a “rated age” for you based on your medical condition. This estimate of how long you are likely to live will ensure that you receive a high, fixed periodic payment from your structured settlement.
Another advantage of a structured settlement is its more cost-effective nature compared to lump sum payouts. This is because interest rates on structured settlement annuities tend to be lower than other investment vehicles, enabling you to purchase larger sums of money than with a lump sum payout.
Structured settlements can be an attractive option for those with disabilities or other injuries that prevent them from working. They cover ongoing expenses like physical therapy or medication, providing a reliable source of income throughout your lifetime.
Structured settlements can also be used to cover the expenses associated with long-term care facilities, like nursing homes or assisted living. You may even use these funds to establish a trust for your children or other beneficiaries.
To successfully secure a structured settlement, it’s essential that you comprehend all available options and benefits. Doing this will enable you to make an informed decision that suits your individual situation.
What are the drawbacks of a structured settlement?
Structured settlements can be an excellent option to ensure you receive the financial compensation you are due. However, they come with some potential drawbacks that must be taken into account prior to signing on the dotted line.
One major disadvantage of a structured settlement is that the money received is not tax-exempt. This could cause issues for those relying on these funds for everyday living expenses.
It is easy for someone to spend money on frivolous expenses, leaving them with nothing left over. This issue is especially prevalent for those who have been injured and cannot work due to injury.
Another major disadvantage of a structured settlement is that payments are usually managed by another party, such as an insurance company or investment firm. If this entity goes bankrupt or fails to pay its clients, plaintiffs could potentially forfeit all of their settlement funds.
Additionally, if the company’s value declines over time, plaintiffs could end up with less money than anticipated. To mitigate this risk, having an expert manage your structured settlement is highly recommended to guarantee the funds remain safe and secure.
Some plaintiffs opt to sell their structured settlement for a lump sum, which may not be the best option. Selling future payments does not always yield as much money as what was originally received and inflation can diminish its value over time.
To determine whether a structured settlement is suitable for you, speak to an experienced personal injury attorney who can assess your case. Unfortunately, the law may not be clear on what constitutes an acceptable structured settlement in each situation.
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