Accident victims and their families can receive a tax-free income stream to pay for medical expenses, replace income lost or ensure future financial security.
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Structured settlements offer plaintiffs flexibility in establishing the payment schedule that best meets their needs, whether that`s starting off small and increasing over time, or decreasing as their needs decrease.
Tax-Free Income
Structured settlements allow injured parties to receive regular income instead of receiving a large lump sum that could be misappropriated. This allows people to cover living costs without depending on public support – another reason why government doesn`t tax structured settlements.
The Periodic Payment Settlement Act of 1992 encourages structured settlements in physical injury and wrongful-death cases. Congress has also extended their use to workers` compensation settlements. Furthermore, tax advantages have been written into the Internal Revenue Code.
Security
The main advantage of structured settlements is the long-term financial stability. This can be especially helpful for people living with medical conditions that will need long-term treatment or care needs.
Structured settlements differ from lump sum awards because they are guaranteed and fixed by the insurance company issuing them. This is in contrast to lump-sum awards, which fluctuate with market fluctuations. Furthermore, most states protect these obligations through an insurance guaranty association in case an insurer declares bankruptcy.
Assuring payments will continue no matter what changes take place in the market is also a safeguard against creditors or financial predators who might seek to seize the funds.
Flexibility
Structured settlements offer numerous payment options that meet the needs of many people, from monthly, quarterly or annual installments – you decide the frequency and size of each one – all the way up to annual installments that suit you personally.
Structured settlements provide another benefit by allowing you to customize payments according to your financial situation and future needs. For example, increasing payments if additional money is necessary in the future to cover medical bills or family needs could be advantageous.
Keep in mind the risks involved with structured settlements; for instance, selling it for a lump sum might cause you to forfeit certain tax benefits available under the Periodic Payment Settlement Act.
Reliability
Structured settlements provide your clients with guaranteed funds for a specific date and amount. They also meet both their short-term and long-term healthcare needs.
Reliability refers to the consistency of results from an experiment or measurement, for instance if you take multiple readings of someone`s weight measurement you should get the same reading each time.
When conducting research or creating tests, reliability should always be kept in mind. You want to make sure that your questions and measures don`t change depending on participants` mood, concentration or other influences.
Control
As opposed to receiving one lump sum payment, structured settlements give you more control of your money, enabling you to invest and withdraw large sums as necessary or use it towards purchases when needed.
Another major benefit of structured settlements is that they offer injured victims and their family members tax-free income. The Periodic Payment Settlement Act from 1982 exempts nearly all structured settlements resulting from personal injury suits from US federal income taxes.
Structured settlements are periodic payments, also known as annuity payment, which can be in equal, increasing or decreasing installments.