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What Are Structured Settlements?

Do you have a structured settlement? What are structured settlements? Why do they exist and what are possible pros and cons? Structured settlements are also called “periodic payments”. They are laws that the court allows or allows the defendants to request stating that some or all of the payments awarded by a judge or jury are paid to the injured consumer over a long period of time.

This means that the consumer may not receive their settlement in a lump sum. There are some bonuses to receiving the money this way. There are certain tax breaks that you may receive when you take periodic payments over a lump sum. You will qualify for preferential treatment under Sections 104(a)2 and 130 of the Internal Revenue Code so you pay less in taxes on your settlement.

Structured settlements work to meet the needs of both parties involved and come to an agreement that will successfully work for both. Payments are typically tailored to the individual plaintiff’s needs. You should work together with your attorney as well as the judge and the defendant’s legal representation to come up with structured settlements that work for you.

Sometimes this structured settlement that is ordered by the judge is set up to be paid through the purchase of one or more annuities. These annuities will guarantee your future payments. You can choose to have the structured settlements paid in almost any schedule that both parties agree to. For example, they might make payments in installments every year or monthly. Or they may make lump sum payments every several years such as every 2-5 years.

There are some situations where people need to sell their annuities and cash them in for money right now. There are some companies that are legally authorized to provide these services and some situations where the judge will approve it for the consumer. For example, if you have a financial emergency and you need the money or part of the money right away, the judge may approve for you to cash in some or all of your annuities. If you are considering this, you need to seek legal and financial advice regarding it.