Purchase Structured Settlements - Is It For You?
Sometimes when a court case is settled for a large amount of money
, the settlement may be paid in regular installments over time instead of one lump sum. This is called a structured settlement. The structured settlement can take any form and adhere to any schedule to which both parties agree. There may be regular annual payments or periodic installments every so often. Future payments may be guaranteed by the purchase of annuities. There are companies that will buy out future payments, or purchase structured settlements. In exchange for advancing you cash right now, they will charge a fee.
There are several benefits to having a structured settlement. There can be tax advantages, assurance of future income, and protection from dissipation of funds need for future expenditures. With expert counsel regarding set-up, taxes can be reduced or the settlement may be tax-free altogether. If the plaintiff's award was the result of damages making a person physically disabled, a structured settlement insures that the income will be there in the future for medical equipment and/or care. Minors who have a structured settlement are assured of money for college tuition and other higher education expenses. This is important if you are considering a structured settlement.
Disadvantages to a structured settlement are few. Some people may find themselves in a situation where they want to make a large purchase of house or car. They may want to finance an education and don't have the monetary resources at hand. Other people might do better taking a lump sum settlement and investing it themselves. Their return on the investments could provide them with more income over the long term. Also, sometimes there are exorbitant commissions associated with annuities. Or, the structured settlement value might be overstated by the defense team. Plaintiffs need to do their homework to make sure they are getting full value of their settlement. These instances would be remedied by the structured settlements.
How does one purchase structured settlements? State and federal law restrictions must be examined. In essence, you would be exchanging cash for all your future payments. There are many legal complications that could present themselves. You would need professional counsel on protecting yourself and your interests. There is always a fee involved, based on a percentage of the money advanced to you. Another option would be to have the company you've chosen purchase only a portion of your settlement. You would get the cash advance and then lesser payments would continue in future installments.
by: Troy Truman
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