What is a Structured Settlement?
Structured settlements may sound complicated, but they are relatively simple in practice. The basics: instead of receiving a lawsuit settlement as one lump sum, a structured settlement breaks the total amount down into smaller payments delivered over the course of months or years. Read on to learn all you need to know about structured lawsuit settlements.
What is a structured settlement?
The U.S. Congress began encouraging structured settlements in 1982 as an innovative way to provide compensation for victims of accidents and injuries. With traditional lawsuit settlements, the total settlement is paid to the victim as one lump sum. With structured settlements, however, the lawsuit settlement is structured, or distributed, over time into tax-free payments. A larger, lump sum is generally paid at the beginning to cover past expenses and current financial obligations. Structured settlements may be agreed upon out of court, or may be part of a court ordered payment schedule.
What are the benefits of structured settlements?
Structured settlement payments work like tax-free income to cover ongoing medical expenses and the costs of everyday living. Part of the reason that structured settlements were created was to create built-in financial responsibility for victims or families who otherwise would have come into a large, difficult-to-manage settlement sum.
Why should I consider a structured settlement?
There are many reasons why a structured settlement may work for you:
- They’re tax-free
- They’ll help you cover recurring expenses, like a mortgage payment or care facility costs
- They can also help you save for future expenses, including a down payment on a home, college funds, or retirement
- They eliminate or lessen the need to manage funds and save
- They guarantee long-term financial security for you and your family
What types of lawsuits generally end with structured settlements?
Structured settlements are most common with personal injury, medical malpractice, defective drugs and similar lawsuits. However, they are also possible in cases involving, but not limited to:
- Employment disputes
- Property damages
- Punitive damages
- Lottery prizes
- Business disputes
- Law firm break-ups
- Attorneys’ fees
Is there flexibility to setting up structured settlements?
Yes, but both parties have to agree to the terms. And in some cases, a judge will determine your payment schedule, amount, length of time, and other factors.
Many factors are taken into account. One of the simplest structured settlements would provide a monthly payment over the long-term, perhaps 25 years. However, if you have been involved in an accident and require the purchase of a wheelchair-accessible van or must adapt your home with wheelchair ramps and wide doorways, then you may receive larger payments during the first five years of your settlement, in order to defray these costs.
What does a typical structured settlement look like?
There is no standard structured settlement, but most have the following options:
- Up-front cash advance (this can help you pay your legal fees, past medical expenses, and other financial obligations)
- Recurring payments deposited monthly or at regular intervals
- Payments guaranteed for life, or for a fixed amount of time (years), or both
- Payments that increase or decrease over time (front- or back-loaded)
- Regular, periodic payments supplemented by scheduled lump sums
What happens if I die before my settlement period is up?
Many lifetime structured settlements are guaranteed for a number of years. For example, if your lifetime settlement is guaranteed for 20 years, you or your heirs will be paid for a minimum of 20 years. If you pass away before that period is over, your designated beneficiaries or your estate will continue receiving those payments until the 20-year guarantee period is completed.
Can another company purchase my tax-exempt structured settlement?
Yes. This is what is generally known as a structured settlement loan. Despite its name, a structured lawsuit settlement loan is actually a type of cash advance on your settlement. In essence, a third-party company like LawStreet Capital purchases part or all of your structured settlement in exchange for a lump sum.
Why would I want to sell my structured settlement?
Structured settlements can be very beneficial, especially if you have regularly recurring expenses due to your injury. However, for most people, these annuity payments are too small to cover large or unforeseen expenses. If you need to raise funds quickly for a home down payment or car purchase, your monthly annuity may not be able to cover these financial necessities. That’s where a post settlement loan, or cash advance on your remaining settlement total, comes in.
How does a structured lawsuit settlement loan work?
Getting your cash advance is incredibly simple. You contact LawStreet Capital to apply for your post settlement loan. Since the funds are already yours, we don’t run a credit check or employment verification. We’ll usually approve your application within 24 hours, and then we’ll overnight the funds to your account or send you a check – your choice. Depending on your financial goals, we can purchase your entire structured settlement or just a part of it. Get started today by calling our helpful representatives toll-free at 800-345-8500.