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How to Choose a Right Debt Settlement Company
By Natalie Aranda
Debt consolidation is the best way to pay off your debt quicker, lowering your monthly payments. One of the forms of debt relief widely used is debt settlement, but before starting the quest for Read more...
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structured settlements periodic payment judgments
Below, you'll
find extensive information on leading structured settlements periodic payment judgments articles and products
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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.
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Structured Settlements - Should You Sell Yours?
By Charles Essmeier, Thu Dec 8th
In recent years, it has become more common for victims ofaccidental injury who accept a settlement from the at-faultparty to accept a structured settlement instead of a lump-sumpayment. With a Read more...
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Additional
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Structured Settlement Or A One-time Lump Sum Payment?
By Greg Smith, Thu Dec 8th
If you are involved with a legal decision, financial claim orinsurance arrangement, the financing process to settle andresolve the claim can often take two forms. Either a one-timelump sum Read more...
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