Structured Settlement Options, Everything You Need to Know

You may have suffered a disability as the result of an accident, been involved in an incident at work, had a severe injury requiring long term medical support or have lost a loved one through negligence for which you have been awarded financial compensation, if so, the best option for you may be to take your compensation as a structured settlement.

A structured settlement is a regular payment amount that will be agreed on usually as the result of a lawsuit or alternatively an arrangement made between the plaintiff and the defendant in an out of court settlement. It is a voluntary agreement between the injured party and the defendant.

Why opt for a structured settlement?

Structured settlements can offer you the certainty that you will receive your payments over a fixed period of time rather than in a lump sum. A structured settlement can enable you to meet and budget for present and future financial needs as you will have a regular income to rely on. This can be particularly beneficial, especially if you have lost your income and have a family to support and bills to pay as it will help you to manage your money on a long-term basis and continue to support your family. You can make an agreement to receive your payments at regular intervals such as monthly, quarterly, or annually, depending on what best suits your requirements. A structured settlement may also have an added tax benefit as in most cases they are considered a tax-free settlement, although there are some exceptions. 

What if I change my mind in the future, can I opt for a lump sum?

You may opt further down the line to sell your structured settlement to a factoring company for immediate cash to speed up access to funds if, for example, you needed to increase your cash flow. You must take into account that if you do decide on this option it will have the advantage of freeing up immediate cash but in the long run, the disadvantage will be that you will receive a less amount than if you had stuck to your original settlement. It is your right to take this option and you can sell part of your full settlement to a structured settlement buyer.

You must first obtain court approval for this and the arrangement will have to go before a judge. The involvement of a judge is purely for your protection as they will look at your case and make sure that the ruling is in your best interest. It is a good idea to enlist the help of an attorney who specializes in selling structured settlements as they will have the experience of past cases and of dealing with reputable factoring companies. Bear in mind that if going down this route you will be responsible for court and attorney costs, so it is always a good idea to take this into account.

In Summary, there are advantages and disadvantages of accepting a structured settlement and it is always a good idea to consider your own personal requirements as this will ultimately determine the best route for you to take.

Pro’s

You are guaranteed to receive a regular amount of money over an agreed period of time giving you a regular income.

A structured settlement will help you to budget to meet your everyday financial requirements.

Con’s

You will not have access to a lump sum but will receive the money via smaller amounts limiting you to what you can invest in.

If you have an unexpected large bill, for example a costly medical expense, you may not be able to pay it.