Simple Explanation What Is a Structured Settlement?

Simple Explanation What Is a Structured Settlement?

What is a structured settlement? Knowing what you have is key to making a payment. For most people, the only time they ever hear about structured settlements is late-night television advertisements to talk about it's your money and you want it to know. What exactly is a structured settlement? Knowing what one is can help you in deciding, if one's even right through you should, the time come. When you might have the opportunity to even partake in one. Structured settlements are financial instruments. And they're the result of an out-of-court damage settlement between a claimant and a purported, responsible party. Instead of a court case in which the initiating party responsible may or may not be liable for the damages incurred.

Simple Explanation What Is a Structured Settlement?
Simple Explanation What Is a Structured Settlement?

Win-Win Situation.

The claimant receives a payment package spread. Usually, over a long period of time as well. As a document stating that they will not seek further claims against the offending party. This agreement satisfies both the claimant as they receive compensation for damages. The initiating party as they remain outside the courts. On the front page of the newspaper and innocent of any wrongdoing in the eyes of the law. Both sides this agreement is viewed as a win-win situation.


How A Structured Settlement Would Be Initiated?

How a structured settlement would be initiated? Let's say a customer is walking through a large dude yourself store in the lumber section, and the racket two-by-fours break free and it lands on. They cause serious physical injury. It's clear that this situation that the store is at fault. For not providing a safe shopping environment. While in negotiations with the store's team of lawyers, the customer is offered a sum of money by the company as a settlement. If the injured customer agrees not to press legal charges and will sign a waiver stating that they will not seek further damages in the future. Let's say as part of an agreement. The injured party agrees to accept a total sum of $100,000 over 20 years payable and a monthly installment of 4/16.

Structure Settlement Benefits

This is going to be the basic structure settlement. The benefits are simply this; a structured settlement is asset-backed security. Meaning it is guaranteed income for the life of the term. And as it is most often for personal injury claims. The IRS considers this as non-taxable income and will not be calculated when taxes are being prepared. But, a word of caution, as instruments made with the settlement funds is considered income and they will be taxed as such.

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