If you are looking for all the facts on structured settlements, you’ve come to the right place.  Let’s start with the obvious and explain what a structured settlement is.  In layman’s terms, a structured settlement is a financial or insurance arrangement where an injured party receives payments in  installments over a period of time (e.g. monthly or yearly) instead of a single lump sum payment.  Additionally, these installments can be structured in a way to suit your needs and protect you from inflation.  For example, the arrangement could be simple whereby you receive a single annual payment or more complex whereby you are paid an initial lump sum followed by monthly installments, deferred payments, and have other special provisions associated with it relating to your future care.

Structured settlements were first utilized in the US and Canada in the 1970s as an alternative to lump sum payments.  They have now become a part of the statutory tort law of number of countries such as the US, Canada, England, and Australia.  The US has enacted statutory laws at both the federal and state level to govern structured settlements.  A structured settlement is generally regarded to be a secure, long term source of income for the beneficiary.  Additionally, they are tax free for the duration of their tenure.

Structured settlement agreements are normally entered into through negotiation between the lawyers of the injured party and the defendant.  The reimbursement amount is dependent on factors such as severity of the accident, degree of disability of the injured party, and project future income and medical expenses of the injured.  It is, therefore, extremely important for the injured party to hire a competent lawyer to help insure that he/she is compensated fairly.  Once a reimbursement amount and other stipulations are agreed upon, the terms of a structured settlement are documented in a contract.  A key point that should be noted here is that once a structured settlement agreement is reached, the recipient cannot demand advances or change its terms if any way.  If the recipient does at some point have an urgent need for a lump sum of cash, there may be options to sell his or her structured settlement to companies that purchase them but there are various restrictions and implications surrounding such sales.  Click here to learn more.

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