Structured Settlements Authority

How to Get Cash for a Structured Settlement

Alternatives to Large Cash Settlements

There has been much media attention in recent years about court cases that result in large cash settlements. In both popular culture and in legal circles, large monetary judgments have become the most talked-about aspect of the American legal system. These huge awards have even been featured in movies but attention is seldom focused on what is in the true best interest of the beneficiary. Is a cash settlement the only possible form of compensation? Is a having a large cash lump sum payment really in the best interest of the injured person?

The reason for these questions may not be obvious to you at first but they should be real concerns for many individuals involved in settlement claims. Often times the injured party is young with little knowledge of business or how to manage money. In other cases involving sever physical impairments or brain injuries the settlement recipient may not be adequately trained or prepared to handle the problems associated with large cash payments. Over a lifetime these individuals will require a lifetime of expensive medical care as well as a replacement form of income. Relying on their own limited knowledge, the advice of family members or self serving friends who leach themselves to these individuals, can result in a long term financial disaster and the complete loss of benefits.

Because of these concerns, and in a broadly supported effort to protect these individuals, new legislation was passed to provide protection. A new form of compensation called a structured settlement was created to provide an alternative form of settlement resolution. As an incentive to encourage the use of structured settlements, congress added a provision to the federal tax code that offers structured settlement payments tax free status.

Under a structured settlement, the injured individual and or parents or guardians work with an attorney and an outside settlement broker to determine their long term medical and living needs. They would do their best to identify future needs such as planned operations, ongoing medical treatments and rehabilitation. As part of the structured settlement, an annuity would be purchased from an independent party such as an insurance company who would then make the future payments to the individual. Under the provision of the tax law and appreciation or interest on the structured settlement payments is completely tax free. Because of this tax exclusion, over time the annuity will grow faster and be able to provide an after tax return few other investments could match. Properly structured, these settlement agreements can provide the recipient with annuity payments for their future needs and will give them peace of mind as well.

Legal Aspects of Getting Cash for a Structured Settlement