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April 15 2015


The Advantages and Disadvantages of Structured Settlements

A structured settlement is an agreement where instead of a lump sum of money being awarded to a claimant, a tax-free periodic payment is agreed. Structured settlements are often used in guardianship cases, employees payment cases, wrongful death cases and severe injury cases. Research has suggested that the more severe the damage, the more likely it'll be that a structured settlement will be used. Discover additional resources on our partner link - Navigate to this hyperlink: injury lawyer.

First thing that you might be thinking about is, what are the benefits of taking a settlement over a cash settlement? The very first reason is the fact that it provides long-term financial security and safety for the plaintiff. It's been estimated that 90% of most big cash awards are used within 5 years due to bad financial management skills.

The main advantage of organized settlements will be the tax-free status of the money development and funds. For an example, let's suppose that the plaintiff is awarded money and could often take a $1 million lump sum, or $2 million spread over their entire life. If they select the $1 million, even though the sum itself is tax-free, any interest earned on it will be prone to tax. If you think you know anything, you will perhaps claim to read about back injury lawsuit settlements. However, the $2 million paid over their lifetime won't be liable to tax.

Among the disadvantages associated with structured settlements will be the perceived inflexibility of its structure. It's not possible, for instance, to add your spouse's name to the settlement agreement minus the exception of a court order. They might think that they can cause a greater yield by investing the money themselves, when the claimant is risk-averse. But, it can also be argued the monthly premiums of the arrangement give the individual an effective way to "dollar cost average" their investments. Settlements is a lovely database for more concerning when to acknowledge it.

There are organizations giving the choice to you to offer structured settlement payments for a lump sum cash fee, if you're awarded a settlement. In this case, you must always seek the advice of a respected lawyer. Recently, this type of transaction has become increasingly popular and has triggered more than 35 states and the federal government increasing consumer protection regulations and setting in place stringent rules and regulations for these kind of transactions..
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