Structured Settlements

Structured settlements are an insurance or financial arrangement that involves a claimant accepting periodic payments in order to resolve a personal injury claim or to settle an obligatory periodic payment. These kinds of settlements were first used in the United States and Canada in the ‘70’s as opposed to lump sum payments, which were the norm then. A conventional structured element comes about when an injured person, who is the claimant, agrees to do away with a tort suit in order to enforce a settlement agreement that stipulates that the claimant agrees to withdraw or dismiss the suit and the defendant accepts to pay periodic sums of money to the claimant. Thus, the defendant and or the insurance company find themselves stuck with a long term obligation to pay the plaintiff.
These structured settlements have now been adopted as part tort law by several countries such as England, Canada, the United States and Australia. These structured settlements can include income tax, benefits and also spendthrift requirements. All these are considered as asset backed securities.
Structured settlements are often created by purchasing annuities ranging from one or more. This guarantees future payments. Structured settlement payments are alternatively known as periodic payments. When periodic payments are brought into a trial judgment, they become known as a periodic payment judgment. They are also variously called regular bond coupons.
When a plaintiff wins a case for a large amount of money, the defendant, the plaintiff’s lawyer, or a financial advisor who advices the plaintiff as concerns the settlement, propose payment of the settlement in installments over a certain period of time instead of paying out the sum in a lump sum. A payment is deemed a structured settlement when it is paid out in this way.
Structured payments provide for payment in just about any schedule the parties involved choose. I.e. the settlement can be paid in yearly installments over a specified period or it can be paid by periodic amounts of money after every few years.

Next page : The benefits of using the structured settlement

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