Structured Settlement Information

Structured settlements have become a common way for people who have been injured to receive periodic annuity payments from insurance companies. Advantages to a structured settlement versus lump sum settlement include increased flexibility and tax benefits. It is unlikely that you will have a problem finding a local or national structured settlement attorney to discuss your specific situation.

With a structured settlement, you receive a predetermined amount of money, tax-free, on a periodic basis. This type of payment schedule can be beneficial for those who have been injured and face unknown future employment or those who are less skilled financial managers.  Many people may also be looking for something that is guaranteed in the face of much uncertainty. 

As far as flexibility, structured settlement terms can be negotiated in an endless number of ways.  For example, your structured settlement attorney may negotiate a lump sum of money paid up front, followed by monthly payments there after.  It is important to note that the flexibility you have with the terms and specifics of your structured settlement end when your settlement is finalized.

So what happens if your financial needs change after your structured settlement is finalized?  You do have options, but it will be on someone else's terms.  Many financial organizations will give you a lump sum of cash in exchange for a period of your structured settlement payments, or the remainder of the settlement.  There are benefits and drawbacks to this.

One of the drawbacks is the percentage of your future structured settlement payments that you will actualy recive when you are shopping for a lump sum payment.  Depending your specific payment schedule, you can expect to collect anywhere between 25 to 50% of the value of the payments you are selling.  Another drawback is that the lump sum you recive will be taxed. So if you are looking to sell one year of your structured settlement, your lump sum offer may look like this:

Example

Monthly Settlement Payment:         $1,000
Number of Months you are Selling:     x  12
                                               $12,000
Lump Sum Offer:                               50%
                                                 $6,000
Estimated Taxes:                              33%
Your Lump Sum:                              $3,960