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Reference Desk
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Structured Settlements Explained
By Paul R. J. Smith
A structured settlement is a
plan in which you receive payments over a set period of time instead of
receiving a lump sum of cash; you will receive payments weekly, monthly or
even yearly.
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Structured payments are most
often used when a large amount of money is at issue such as jackpot
lottery winnings where you are usually given the choice of receiving
a number of smaller amounts of money over an extended period of
time.
Insurance payouts can also be taken in this way and it is also
commonly used in cases of malpractice, where a family member has
been severely injured or even lost.
Payments may then be awarded
to those left behind over the victim’s life span. |
Structured Settlements; The
Pros and Cons
A large cash sum can sometimes have the advantage over structured payments
particularly if the money is needed there and then, say if it is an
insurance payout where most of your household content has been destroyed
and the money is needed to replace everything. In this case structured
payments can be a bind.
Another thing to bear in mind is that the value of the dollar is likely to
decrease over a long period of time so what started out as a satisfactory
amount per month at the beginning of the structured payout will become
less over time. Several options are available to those having been awarded
a structured settlement but good advice is needed before acting on any of
them.
A structured settlement broker’s advice may be the wisest choice for most
of us in making sure we get the most from our settlement. On the other
hand a structured settlement is much easier to manage providing you can
easily live on the amount of money coming in each month, this will usually
pose no problem as the beneficiary’s needs will have been ascertained
before the award is made.
Structured payments are particularly helpful for those who have received
money by way of an accident and are unable to work; it gives a sense of
security knowing a set amount will be paid each month. Structured payments
are preferred for obvious reasons by the party paying as no lump sum has
to be paid out immediately.
Selling Your Structure Payment Plan
Should you wish to do so there are
options available to you for turning you structured payments into a cash
sum, here advice should be taken and in most cases a structured settlement
broker’s advice should be sought.
An important thing to consider before taking the decision to sell your
payment plan is that the broker will of course have to benefit from it and
his profit will be taken from your money.
Once all avenues have been explored and you have made the choice of
selling your structured plan then shop around, see several different
brokers’s and make sure they are reputable. Never jump at the first offer
that is made and if in any doubt seek the help of an attorney before
making any decision.
Copyright Isettlement.net 2006
Everything you've ever wanted to know about Structured Settlements &
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