Structured Settlement - A Newbie Guide To Basics

Usually, when you win a judgment, the defendant has to pay you a judgment or a settlement amount in a lump sum. But this is just one option. Often the judge decides, that the structured settlement payments are better aids to your situation. They are paid periodically during an agreed period of time.

1. What Does The Term Structured Mean?

The court can decide, that the future periodic payments will be structured in a way, that they will fit to your financial needs and to protect you against the inflation, for instance. The structure can include a simple yearly payment, a complex arrangements including a lump sum to start with, the indexed installments every month, deferred payments, and special provisions relating to the future health care or death of the insured.

2. The Structured Settlement Releases You From The Financial Planning.

This is the best part to the recipients, who are not interested or not capable to plan their financial futures, like minors. Because the payments will come along the agreed schedule, that is a guaranteed income. The future settlements cannot be used as the loan guarantees, so they are protected.

3. The Taxation.

Most structured settlements are tax free income. If a person gets income only from the structured settlement, he can be a totally tax free person. The lump sums are taxable.

4. The Sale Of The Structured Settlement.

I started this article by saying that a recipient usually gets the settlement as a result of the court judgment and the purpose is to guarantee the financial needs of the recipient. If the financial situation of the recipient will change dramatically and he can show, that he honestly needs a lump sum of cash money, the judge may allow to sell the settlement payments.

5. Once Agreed Settlement Plan Cannot Be Changed.

Some recipients have seen this feature as a negative point, because how would somebody forecast his or her financial ndeds years before? If the target of the settlement has originally been to pay for the health damage, the situation may have changed during the years.

In the case, that the recipient needs immediate cash money, he or she has to turn to the judge and to ask a permission to sell the settlement plan. If the reasons are heavy enough, that can be possible.

Juhani Tontti, B.Sc., Marketing. A newbie has to get information about the structured settlement before he will purchase structured settlements. Visit: structured settlement loans



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