The Positive Effect Of Structural Settlement
If you have had a personal injury case decided in your favor, you may receive what is termed a structural settlement. This is a settlement for personal injury damages that isn’t a lump sum payment but rather a series of payments over time.
Instead of the lump sum payout that has been the common way to pay damages for many years, a structured settlement takes this award and pays it out in installments over time.
It works like this. When you are injured and you press a lawsuit against the other party, the other party is found liable and you are awarded damages. The settlement damages are then scheduled for a payout over time. It is like you are a creditor, and the liable party has to make payments on what they owe you, although they do not pay interest on this. It simply breaks down the amount owed into regular payments.
The period of time for a structural settlement can vary. Generally payments are monthly, and are paid out over years. Depending on the monthly sum and the total award amount, the payout term will be shorter or longer. If you have a settlement that is very large, it may pay out over decades even.
Both the injured party and the liable party can benefit from this setup. The injured party often does better when they get their money over time instead of all at once.
When you get a structured settlement instead of a lump sum payout, it can help to ensure that you have money coming in over the full length of time you are still having effects from your injury. You may not know how long this will be, and if you get – and spend – a lump sum settlement, then there is nothing else coming in to cover your medical needs or replace lost income.
It isn’t just the injured party that benefits when damages are awarded via structured settlement. The liable party also benefits. The liable party ends up avoiding a huge tax burden. The tax amount is reduced since the settlement is paid over time.
Now you have some idea of how a structured settlement works. Clearly this helps to ensure that an injured party has income over a period of years instead of getting their money all at once. It generally benefits all sides when a settlement is paid out in this fashion.
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