What Is Significant About A Legal Structured Settlement And How Are They Used?
Most of the civil lawsuits especially personal injury and accident cases rarely make it to the court of law because the parties involved arrive at an out-of-court structured settlement early in the litigation process. A structured settlement is an agreement where the defendant agrees to pay the plaintiff with fixed payments for a specified period or the rest of their life.
Significance of a Legal structured settlement
The structured settlement is particularly helpful if the plaintiff has suffered a catastrophic injury. The plaintiff’s lawyer draws up the agreement, and the defendant’s insurer funds a standard annuity policy for the plaintiff. This way, the plaintiff, or their kin receives income over the term arrived at by both parties.
Annuity contracts are complex, and it is necessary to discuss all the tax obligations and the amount that will be able to cover a multitude of unexpected expenses in the future. In many states, state insurance laws protect the annuity by guaranteeing that the insurer meets their obligations.
One of the best reasons to agree to a structured settlement is that the proceeds do not attract any tax from state or federal governments.
How are Legal Structured Settlements Used
Structured settlements have various uses, and it is solely dependent on the plaintiff to use the proceeds. In the present age, some claimants sell their structured settlements for a lesser-valued lump sum payment to either settle debts or fulfill other financial obligations. For this use, the seller must obtain the approval of a judge.
The other option is to stick to the terms of the structured settlement and accept the payments as they come for as long as the settlement specifies.
In conclusion, instead of waiting for the settlement of the case, you can simply get your attorney to reach out to the defendant’s attorney to draft a structured settlement. It gives you peace of mind knowing that you will have an income for as long as the structured settlement is in force.