Structured Settlement FAQs – You’ve been offered a structured settlement in your wrongful injury case. It sounds like a pretty good deal. But you’re not sure. You’re not sure it’s the right thing for you. You’re uncertain as to what it all means and what it all entails. Just what is a structured settlement? You need more information. Let’s try and clear up some of your confusion.
What is a structured settlement? A structured settlement is when a company or individual, or a company such as an insurance company representing another company or individual, offers you an out-of-court “settlement” in the form of cash in exchange for you dropping the suit you have brought against them. You and they set up a “structured settlement” meaning that you will receive periodic payments – typically monthly – instead of one large pay-out. Your structured settlement cash is then yours to do with as you wish.
Where does the money come from? The defendant in your case will purchase an insurance annuity – basically an investment in or with an insurance company. This investment is then supposed to grow, supplying them with the funds they need to meet their financial obligations to you.
Are there any restrictions placed on structured settlements? There may be. It really depends on the nature of your original agreement. If the law suit was on behalf of a child, for example, the company may insist that the moneys can only be use to fund his or her education. If the lawsuit was on behalf of an injured employee or customer, the funds can be earmarked for further necessary medical treatments and therapies. Most cannot be transferred from the original party to anyone else, ending the payments on the person’s death
How do I know if my structured settlement is a good one? Well, you don’t, and neither do we. Only your attorney can really advise you as to the quality of your settlement. If your monthly payment is going to be so small as to practically be a non-thing, you may want to insist on a lump sum payment instead. If your settlement is going to last longer than you will, you may want to reconsider as well.
Is there any way to end a structured settlement? Yes, and no. Your original settlement agreement will have a termination date – when the last of the settlement cash has been paid. NO more money owed you – no more structured settlement. Or you can choose to approach a structured settlement agency. These firms specialize in purchasing the annuities that the structured settlements are based on. They then take a cut or share of the annuity before turning over the remaining funds to you. In this way, you can change from a small monthly payment to a large one-time lump sum.
If you are in such ill-health that you don’t think you’ll survive till the end of the settlement terms, you may choose to do this, as the cash can then be re-assigned to your heirs in the event of your death. You will not receive the full amount, as the settlement firm will have to take their share, but you’ll have more to leave behind this way.