How Does a Structured Settlement Work?

A structured settlement guarantees the recipient tax-free income installments over the life of the settlement. Learn how does a structured settlement work here.

If you are in the process of finalizing or receiving a structured settlement you might be feeling overwhelmed asking yourself “how does a structured settlement work?” If this is the case, you’re in the right place!

We have put together this guide to help you understand how a structured settlement works and some options you have.

How Does a Structured Settlement Work?

The first thing that you want to understand is that structured settlements are not awarded they are negotiated. Once the amount is negotiated it is disbursed to the claimant through set payments. Keep in mind these payments are tax-free because a structured settlement is a tax-free lawsuit.

The process of settling the case involves the plaintiff (the person that has received the injury) and the defendant (the person that caused the harm). The process starts with the plaintiff suing the defendant to seek compensation. The defendant usually chooses to agree to give money to the plaintiff through a structured settlement in hopes of avoiding a trial.

Who Is Eligible?

Not everyone is eligible to file this tax-free lawsuit. Only personal injury victims or workplace injury victims have the right to file for a structured settlement. Cases such as personal injury, workers’ compensation, wrongful death, and medical malpractice are the most common type of cases that receive a structured settlement.

Payout Options

Once you are found eligible to receive your payout through a structured settlement you can choose if you want to receive the funds immediately or on a later date.

If you choose to postpone the date you can gain interest during the period of time the settlement is left alone. You also have the option of setting up the date for the payments and whether you want the payments to always be the same or vary depending on the month or year.

Selling Your Settlement

If you find yourself needing all of the money right now then you have the option of selling your structured settlement to a reputable company. Selling it isn’t as complicated as it may sound and it will allow you to have a lump sum paid out instead of waiting years.

You can take a look at this company here that is willing to beat any offer that you have received for your structured settlement. Make sure to do your research and before pulling the trigger make sure that you have the full legal rights to sell your structured settlement.

Knowledge Is Power

Understanding how does a structured settlement work will help you out if you are currently going through the process or have recently been injured and will be going through the process.

Dealing with any type of injury or wrongful death is never easy. We hope to have been able to make the process a little less stressful by educating you a little more about structured settlements.

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About FinanceGAB

Ajeet Sharma is a financial blogger and I am blogging since 2017. Financegab is a personal blog dedicated to personal finance. The main aim of this blog to help people to make well-informed financial decisions.
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