Advantages of Structured Settlements

Incorporating a structured settlement as part of your settlement has many advantages including:
 
Tax-Free Benefits: Since 1982, the Internal Revenue Service created an opportunity for you, the claimant, to invest a portion of your settlement in a tax-free structured settlement. The interest income is not taxed by the IRS as it is considered compensation for a loss. Should you settle your claim with a lump sum and then invest the money yourself, you will pay taxes on the interest earned.
 
Guaranteed Payments: Unlike a cash only settlement, a structured settlement will provide guaranteed benefits at specified payment dates to assure your financial security. You can receive monthly, annual or quarterly payments for life or for a specified period of time along with lump sums at designated intervals.
 
Flexibility to Meet Individual Needs: A structured settlement is designed to meet your needs. You may wish to provide for future education expenses, supplement a retirement fund, or simply provide for general financial security. Based on your input, the payment plan will be "tailor-made" to meet your objectives.
 
Maximum Security: Structured settlements offer an element of "spendthrift" protection. Since you have no direct or indirect ownership of the annuity, it is considered "bankruptcy proof". That means your payments will not stop regardless of your financial situation.
 
Financial Stability: Unfortunately, it is a statistical fact that 90% of all lump sum settlements are spent within five years and 70% are spent in the first year of a minor reaching his or her age of majority. A structured settlement can eliminate the stress associated with the financial responsibility of providing consistent income.

For the National Structured Settlement Trade Association (NSSTA) brochure, Protecting Children with a Structure, on the advantages of using a structured settlement for injured minors, click here. 

For NSSTA's brochure, Security After Catastrophic Injury and Wrongful Death, on the advantages of using a structured settlement for catastrophic injury and wrongful death, click here.  

  
A "100 Best" mediator describes why structured settlements are so important during mediation. "A Structured Settlement" was originally published in Spinal Cord Injury Life Magazine, January 2009. To download this article, please click here. 

For more information on Structured Settlements, please contact a Structured Financial Associates (SFA) Structured Settlement Consultant today.