Understanding Structured Settlement Payments

When a personal injury case is won or settled, the plaintiff may choose to receive their earnings as a lump sum or as a series of payments over a period of time. This is known as a structured settlement. Structured settlements are often financed by the purchase of one or more annuities, which generate future payments. They are used to replace or supplement income that was lost due to someone else's fault and provide a stable income stream for injury victims.

Congress passed the Periodic Payment Settlement Act in 1982, which simplified the use of structured settlements in personal injury lawsuits. This act made structured settlement profits tax-free. The parties involved in the lawsuit negotiate a cash amount payable by the defendant in exchange for the plaintiff to withdraw the lawsuit. The claimant then chooses to receive part of their settlement money at the time of settlement, and part of it in the future through a negotiated and customized program of periodic payments that are fixed and determinable in terms of amount and time of payment.

Having a series of scheduled payments makes it easier to ensure that your basic needs, such as housing, clothing, food and medical care, are met. Additional investment options are available to claimants who are not interested in a structured settlement annuity. If a legal representative signs on behalf of the person receiving the payment, the request must be accompanied by a copy of the legal document showing the authorization.Modern adoption of these payments can be traced back to Canada in the 1960s, when a drug called thalidomide caused birth defects in thousands of children. Congress thought that by setting payments over time, people would be protected from spending a lump sum too quickly and, therefore, jeopardizing their financial future.

Structured settlements became more popular in the United States during the 1970s as an alternative to lump-sum settlements.We offer financing agreement agreements to facilitate the resolution of agreements that are not based on physical injury or physical illness. Courts use structured settlements in many different types of cases to replace or supplement income that was lost through someone else's fault. Because they are carried out by a third party, it also means that someone does not need to systematically associate with the person or entity that hurt them.A Medicare structured reserve agreement (MSA) generally costs less than an unstructured MSA due to the amortization of future cash flow over the life expectancy of the claimant, rather than funding all payments due in the future in a single undiscounted sum today. Although many beneficiaries of a structured agreement find that the agreement is tailored to their needs, some may experience changes in financial circumstances and cannot obtain funds through conventional financing or other sources.