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bjc 8500 structured settlements
For free information to help you learn more about bjc 8500 structured settlements, your rights, and how to select the best company for you click Read more...
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structured settlements of personal injury claims
The Advantages and Disadvantages of Structured Settlements
By Caroline Smith
A structured settlement is an arrangement where instead of a lump sum of cash being awarded to a claimant, a tax-free periodic payment is agreed. Structured settlements are often used in guardianship cases, workers compensation cases, wrongful death cases and severe injury cases. Research has indicated that the more severe the injury, the more likely it will be that a structured settlement will be used.
The first thing that you may be asking yourself is, what are the advantages of taking a structured settlement over a cash settlement? The first reason is that it offers long-term financial security and protection to the plaintiff. It has been estimated that 90% of all large cash awards are spent within 5 years due to poor financial management skills.
The main advantage of structured settlements is the tax-free status of the payments and capital growth. For an example, let us suppose that a claimant has been awarded a settlement and can either take a $1 million lump sum, or $2 million spread over their lifetime. If they opt for the $1 million, although the sum itself
is tax-free, any interest earned on it will be liable to income tax. However, the $2 million paid over their lifetime will not be liable to income tax.
One of the disadvantages associated with structured settlements is the perceived inflexibility of its structure. It is not possible, for example, to add your spouse's name to the settlement agreement without the exception of a court order. If the claimant is risk averse, they may believe that they can create a higher yield by investing the money themselves. However, it can also be argued that the monthly payments of the settlement give the investor a great way to "dollar cost average" their investments.
If you are awarded a structured settlement, there are companies that give you the option to sell structured settlement payments for a lump sum cash fee. In this situation, you should always seek the advice of a trusted attorney. In recent years, this type of transaction has become increasingly popular and has resulted in more than 35 states and the federal government increasing consumer protection statutes and setting in place strict rules and regulations for these types of transactions.
Caroline Smith is a regular contributor to SettlementsCash.com - An online resource providing information on structured settlements and cash for structured settlement companies.
We strive to provide only quality articles, so
if there is a specific topic related to structured settlement that
you would like us to cover, please contact us at any time. And again, thank you to those contributing daily to our structured settlements of personal injury claims website
Additional
Resources
Structured Settlement Payments - The Who And The What
By Richard M, Thu Dec 8th
align="left">A structured settlement is a series of paymentsmade over a period of time. People usually get them as a resultof a lawsuit. For various reasons, people who receive thesepayments, Read more...
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Additional
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A Structured Settlement Nightmare: Don't Let This Happen To You
By Michael DeGeorge
Accidents happen. Medical malpractice, while difficult to accept, happens. These are just a couple of instances where forces beyond your control can turn your life upside down and change it forever. Read more...
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