Advantages Of A Structured Settlement

Cash received from a structured settlement is not taxable at the state or federal level. If you receive a large amount as a settlement advance and invest it, the interest from the sum becomes taxable. In a structured settlement system, the payee gets a small fixed amount of cash over certain time. A structured settlement system is beneficial to senior citizens since there is a fixed amount of cash, which comes to them regularly over time. This ensures that they have money whenever they need it.

The payee in a structured settlement need not worry about investing the entire amount of the settlement, hence the settlement is insulated from problems arising from poor financial planning. There is a steady flow of income, which is meant to sustain the payee over a long period of time.

If the payee has been awarded a large sum to the tune of millions of dollars, it is a huge sum to come to terms with. However, if this amount is disbursed over a period of time, in smaller installments, it is more beneficial especially if the payee is unable to work for the rest of their life. In such cases, a small monthly check is certainly recommended.

Structured settlements are generally suitable for the following cases:

- The settlement has been awarded to someone who has been severely injured. In such cases the treatment will go on for a long time, and structured settlements will help sustain the victim's family.

- In cases of compensation being awarded to workers, where an injury prevents the workers from working full time. This reduces the worker's ability to work causing a reduction in the monthly pay check. Thus a structured settlement provides welcome relief.

- When the settlement is awarded to an injured person who has sustained permanent or partial disability. Such a person is greatly benefited by a small but assured monthly payment.

- In cases of settlements being awarded for wrongful death, where the surviving members of the person's family will be assured a monthly sum, which can replace the income of the deceased.

- Settlement to a person who is mentally incapacitated, or a child. In such cases, the fixed amount from the settlement can be used to cover medical expenses and general expenses.

If the situation is any of the above, then the following factors should also be considered

- The duration for which the payee is expected to bear medical expenses. Future increase in expenses due to additional care requirement should also be taken into account.

- Other medical expenses and expenses for care facilities, including advanced treatment, hospital bills, rehabilitation expenses etc.

- Expenses for education, retirement, and daily household expenses

- Expenses towards rent, paying off debts like a mortgage, and any other expenses that may not have been taken into account.

The settlement should be structured, taking into account the duration of medical expenses, type of disability and the possibility for partial or complete recovery in the future.

A structured settlement can be customized to suit the payee's unique situation, which can be designed to be distributed over the lifetime of the payee, and inflation can be factored into it, ensuring that the amount increases yearly based on the increase in cost of living

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