ABOUT STRUCTURED SETTLEMENTS: Benefits

Benefits to the Injured Party
A structured settlement provides the injured party a guaranteed triple tax-free income, often for life, and reduces the potential for mismanagement of funds. Because a structure is a guaranteed source of funds paid on a tax-free basis, it is very difficult for even the sophisticated investor to match the rate-of-return generated by a structure.

Benefits to the Plaintiff Attorney
By using the structured settlement approach, the trial attorney can be assured that the client will receive guaranteed, tax-free payments. The payments are not vulnerable to mismanagement by the injured person, or unscrupulous outsiders or market downturns. An additional benefit for the attorney is that his or her fees may also be structured or deferred. In the end, the amount of money one receives through deferred payments is greater than what one would receive from a lump-sum payment, because there is less taxation since benefits may be received over time. The payments provide a steady stream of income, either for a certain period or for life, and make overall income management easier.

Benefits to the Defendant/Insurer
Expenses associated with paying claims are eliminated. In addition, savings are realized by lowering overall administrative costs.

Benefits to Judges
Judges universally support the structured settlement concept. It is especially appealing in guardianship cases because judges have the responsibility of approving settlements. It is clear to the courts that all too often the injured parties dissipate their awards, and without other means of support, become wards of the state. Structured settlements protect the person for whom the funds are intended.