Benefits of a Structured Settlement

Structured settlements are a financial arrangement that a claimant agrees to undertake in order to resolve a claim of damages against a defendant. The payment of these sums is done through periodic payments.
This type of structured settlement has a number of advantages, and one of them is avoidance of tax. With a well put together set up, the structured settlement may well reduce the claimant’s tax obligations due to the settlement; furthermore, in some cases the settlement could be deemed tax free.
Structured settlements may also protect a claimant from having the funds depleted quickly when in fact they are needed for long term and future needs. This helps protect the claimant from himself since as the adage goes, “some people are just not good with money”, others can never say no to greedy relatives who want to reap where they did not sow. Cases have been well documented of people who have rapidly exhausted large amounts of money. A structured settlement is also beneficial to minors in that they may get a structured settlement that provides for some of their youthful needs, more disbursements to cater for college and other expenses and also further disbursements for their adulthood. If these amounts were given in a lump sum, they would have probably been exhausted way before the minor had reached the college going age.
A claimant who has been injured and affected for life can also benefit greatly through this arrangement. His special needs may be met through disbursing of periodic lump sums that may help him purchase medical utilities like wheel chairs, orthopedic beds, medication, etc. In some instances, a seriously disabled claimant may benefit from the setting up of a trust to cater for his special needs, as opposed to entering into a structured settlement or payment through lump sum.

Next page : Considerations when setting up a structured settlement

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