Uses & Benefits

When to Use a Structured Settlement

Should the circumstance warrant its use, a structured settlement can be extremely beneficial. But first, how do you know if you might benefit from a structured settlement? If you worry about any of the following questions, a structured settlement may be something you want to consider when settling your personal injury claim.

  • "How am I going to pay my bills in the future? My injuries are so severe, I cannot return to work."

  • "How am I going to educate my children?"  A structured settlement can for formulated to provide income-tax free benefits to you during the time your children go off to college.

  • "How will I be able to retire? I can get by now, but I don’t think I can save enough to retire one day."  A structured settlement can be designed to pay you monthly or annual income-tax-free benefits for the rest of your life beginning when you reach the age at which you want to retire.

There are numerous ways to develop structured settlements which are based primarily on the financial needs of the injured person and his or her family. It can be as simple as regular payments over a period of time or a complex schedule of payments designed to meet the specific needs of the injured party. The professionals at ASC can help determine what and how you will need to allocate your settlement taking into account cost-of-living adjustments and increases in medical costs over time.

The Benefits of a Structured Settlement

Structured Settlements have grown in popularity over the past 25 years due to the numerous advantages associated with this type of planning. Here are some top-line benefits:

Income-Tax-Free Payments. The Periodic Payment Settlement Act of 1982 was passed by Congress to amend the federal tax code to establish structured settlements. The statute provides that compensation paid to a party who sustained a physical personal injury, whether in a lump sum or periodic payments, are income tax free.

Security. A structured settlement provides guaranteed long-term benefits for medical and living expenses. It is funded by a life insurance annuity or a U.S. Treasury obligation—two of the safest funding sources available, and, once established, are not subject to changes in interest rates or fluctations in the stock market.

Financial Security. A lump-sum personal injury settlement that is invested by conventional means is subject to market risk and almost always requires professional management, giving rise to additional fees and expenses. Structured settlements eliminate both.

Protection. A structured settlement can protect funds from being mishandled. The reality is that many claimants, especially the young, the elderly and those unfamiliar with money management, are unprepared to handle the problems that come with the sudden infusion of cash. Friends, family members and complete strangers can attach themselves to the newly enriched and quickly deplete the funds meant to last years, decades, and even a lifetime.

Peace of Mind. Once a structured settlement is in place, it eliminates the anxiety that comes with wondering if the money was invested correctly or if you planned adequately for the future. With the structured settlement, you know what you are going to receive and when you are going to receive it.