4 Advantages of Structured Settlements

Jacky Gale | November 5th, 2018

When a lawsuit is settled, the defendant agrees to pay the plaintiff a set sum of money in exchange for the resolution of the lawsuit. In many cases, the defendant makes the payment in a lump sum. But sometimes, the plaintiff agrees to accept smaller payments made over time. This is known as a structured settlement, and it offers several advantages for plaintiffs.

However, as advantageous as structured settlements can be, they aren’t right for every plaintiff. Some people discover that, due to unexpected changes in circumstances, they need the balance of the money owed right away, and can no longer wait for scheduled payments over time. If changes in circumstances have caused you to regret accepting a structured settlement, there is a way out. LawStreet Capital is an industry leader in post-settlement funding. It allows you to get the money you need now—no wait required.

Structured settlements guarantee future income

When a plaintiff receives a lump sum payment, he or she may be encouraged to spend more than is prudent. One advantage of structured settlements is that they curb the tendency to overspend. Individuals can use the periodic payments to cover necessities, like medical bills or rent, while being assured that they will continue to receive additional payments in the future. This is particularly advantageous for individuals who require long-term care due to a chronic medical condition.

Structured settlements do not fluctuate

Structured settlements are paid out through an annuity established by an insurance company. They are not subject to the unpredictable fluctuations of the market, unlike financial vehicles like stocks. The insurance company that issues the annuities guarantees that the amount of the payment will remain the same over time.

Heirs can receive structured settlements

Another benefit of structured settlements is that the recipients can designate beneficiaries. In the event that the plaintiff dies before receiving the full balance of the annuity, the individual’s beneficiary will receive these payments according to the terms of the original agreement.

Structured settlements may offer tax advantages

Personal injury settlements are usually not taxable. However, if the plaintiff accepts a large lump sum settlement, he or she will likely invest it in a savings account, money market account, CD, or similar investment vehicle. The interest and dividends earned from the lump sum are taxable. Depending on the size of the lump sum payment and the individual’s investment decisions, this can add up to a sizable tax liability. Because of this, structured settlements may be more advantageous. The money is distributed over time, and so the individual doesn’t have a large sum of money earning interest in an investment account.

How to cash in your structured settlement today

Although structured settlements do offer a number of benefits for plaintiffs, not all individuals find them to be advantageous. If you want to go back to school, get out of debt, buy a house, or make another large purchase, you might prefer to receive the rest of the money that’s sitting in the annuity. Instead of applying for a high-interest bank loan, you can contact a legal funding company like LawStreet Capital.

LawStreet Capital can give you the cash value for your case right away. We offer easy, 24-hour approval and quick cash overnight for qualifying individuals. Post-settlement funding is distributed based on the amount you’ve already been awarded in the settlement, and there’s never any risk to you. Call us today at 888-562-0363.

Additional resources:

  1. Forbes, What’s A “Structured Settlement”? https://www.forbes.com/sites/robertwood/2010/10/26/whats-a-structured-settlement/#256fe6264422
  2. American Bar Association, Five Terms to Consider When Negotiating Settlement Agreements, https://www.americanbar.org/groups/litigation/committees/woman-advocate/articles/2016/5-terms-consider-when-negotiating-settlement-agreements/