What is a structured Settlement?

Structured Settlements are exactly what they sound like. They are settlements that are put on a specific payment structure rather than just one lump sum. They have been traditionally much more common with large products liability claims, but they are becoming increasingly more common. There are pros and cons to accepting a settlement offer on a payment structure. They are especially attractive when the injured victim is a minor, mentally incompetent, or has long-term medical needs or a permanent disability. This article will discuss both sides so that you can make an informed decision about what might be the best option for you and your family.

The Pros:

Structured Settlements can be ideal under many different circumstances. The way these settlements typically work is that rather than dispersing all of the money to the victim, the money is spent on purchasing an interest-earning annuity from one of the top insurance companies. That way, payment is 100% guaranteed. These payments can be scheduled for disbursement in almost any fashion. Small payments on a regular basis, large payouts based on major life events, or a mixture of the two. Anytime that there is a risk of dire circumstances were the funds to be mismanaged, a structured settlement could be the answer. Why not let the experts guarantee you a good interest rate and guarantee you payments paid out at the times that you will need them so that you don’t get into trouble?

The Cons.

You don’t get your money right away. If you have strong financial skills, and you have fully recovered from your injury, you may want to take your settlement as a lump sum. There is little danger of you getting into trouble by abusing your settlement because you have no future medical care to pay for. You may be able to find better investments or business opportunities to put your money into than an annuity can offer. There is certainly a value to having money now. That type of liquidity can come in handy if you are looking to get into a new home, or pay off some high-interest rate debt. If you are in either of those situations, take the money.

So why all the fuss?

TV commercials try to make it seem like structured settlements are a bad idea and that it is your money so why not have it now? Those types of arguments go against the very important reason that structured settlements exist. Most of us in Southern Utah have not held $100,000 cash at any one time. That is an awful lot of money. Because we are inexperienced, mismanagement is more the rule than the exception. We go out and blow our settlements on new cars and televisions. That type of spending can end up putting us in a bind down the road when we realize that we were counting on that money to help us get by and it is now gone. An experienced personal injury attorney would be happy to go over your situation and discuss whether a structured settlement is right for you.

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This article is offered only for general information and educational purposes. It is not offered as and does not constitute legal advice or legal opinion. You should not act or rely on any information contained in this article without first seeking the advice of an attorney.