A structured settlement is a financial agreement in which a defendant or insurance company agrees to make periodic payments to a plaintiff or claimant over a specified period of time, rather than paying a lump sum. These payments are typically made in the form of annuities, which are financial products that provide a steady stream of income over a set period of time.
Structured settlements are often used in personal injury cases, such as those involving medical malpractice or car accidents. They are also used in workers’ compensation cases, wrongful death cases, and other types of lawsuits.
One of the main benefits of a structured settlement is that it provides a steady stream of income for the plaintiff, rather than a one-time payment that may be quickly spent or invested unwisely. This allows the plaintiff to have a predictable source of income for a set period of time, which can be used to cover medical expenses, lost wages, and other costs associated with the injury or illness.
Another benefit of a structured settlement is that it allows the plaintiff to avoid taxes on the settlement amount. Since the payments are made over time, they are not subject to taxes until they are received. This can be a significant advantage for plaintiffs who would otherwise have to pay a large tax bill on a lump sum settlement.
In addition, structured settlements are often used to protect plaintiffs from inflation. This is because the payments are made over a set period of time, which allows the plaintiff to plan for future expenses and adjust for inflation.
While structured settlements can be a great option for plaintiffs, they are not always the best choice. In some cases, plaintiffs may prefer a lump sum payment so that they can invest the money or use it for a specific purpose. Additionally, structured settlements may not be the best choice for plaintiffs who are unsure about their future expenses or who may need more money than the settlement provides.
Overall, a structured settleioment can be a great option for plaintiffs who want a predictable stream of income over a set period of timeio. By providing a steady stream of income, protecting the plaintiff from taxes, and allowing the plaintiff too plan for future expenses, structured settlements can provide financial stability and peace of mind for those who have been injured or suffered a loss.