Over one hundred million people visit the emergency room every year in the United States.
Many of them are suffering from potentially debilitating injuries that were caused by no fault of their own and entitle them to financial damages.
Damages paid as a result of an injury judgment are paid in one of two ways: Lump-sum payments or structured settlements.
Lump-sum payments are simple enough. They award victims all money owed at once. Structured settlements, however, are more nuanced and prone to questions.
Table of Contents
- Here’s a structured settlement FAQ we’ve put together
- What Is a Structured Settlement?
- Do Structured Settlements Have Advantages?
- Can You Convert Structured Settlements to Lump Sum Payments
- Do Courts Need to Get Involved When Selling Structured Settlements?
- Can a Spouse Inherit Your Structured Settlement?
- Our Structured Settlement FAQ Is a Jumping Off Point
Here’s a structured settlement FAQ we’ve put together
What Is a Structured Settlement?
A structured settlement is a payment arrangement you can set up through courts after a judgment has been issued in your favor. It asks defendants to pay you the money you’re entitled to over time.
For example, if you won $100,000 in a legal battle, you could choose to receive monthly payments of $2000 for 50 months.
Do Structured Settlements Have Advantages?
You might look at structured settlements and wonder why anybody would choose them over lump-sum payments. Despite their limiting appearance, structured settlements have advantages that lump payments do not.
For starters, receiving payments piecemeal prevents you from overspending. That’s important if you’re meant to live off of your damage awards for the rest of your life.
If that doesn’t entice you, perhaps the tax incentives that come with structured settlements will. Per US law, structured settlements are 100% tax-exempt. That comes in stark contrast to lump-sum payments which you’ll need to pay full income taxes on.
Can You Convert Structured Settlements to Lump Sum Payments
Converting your structured settlements to lump-sum payments can be emulated by going here or to a number of factoring companies that will buy payments off of you for a lump sum of cash. Unfortunately, this process costs money which providers will shave off the top of your settlement amount.
As far as restructuring your structured settlement into a lump sum without incurring losses goes, the ability to do that is limited. For that reason, you’ll want to be sure you’re comfortable with a structured settlement before accepting it.
Do Courts Need to Get Involved When Selling Structured Settlements?
You will need a court’s approval to sell your structured settlement. This process was put in place to protect injured individuals from being preyed on by overzealous buyers.
If a judge feels that the deal you’re offered is in line with industry standards, they will let you sell your settlement.
Can a Spouse Inherit Your Structured Settlement?
In most cases, your structured settlement payments can be transferred to a spouse. Certain settlement restrictions may prohibit this process though.
If you find that your particular settlement is non-transferable, you may want to opt for a lump payment.
Our Structured Settlement FAQ Is a Jumping Off Point
The structured settlement FAQ items we’ve shared with you hopefully serve as a vehicle to get your knowledge surrounding the subject of settlements off the ground. Know though that there are deeper intricacies to structured settlements. You should explore them with the help of a legal professional.
We wish you the best of luck finding a settlement structure that works for you. For additional information, explore more of the newest content on our blog!