Structured Settlements
Structured Settlements - What Are They?
Structured settlements are typically payments that a person receives as a structured settlement payment for settlement of a personal injury claim.
This occurs when payment from a personal injury claim are paid by periodic payments versus a lump sum payment. These payments are received tax free as they are considered monetary relief for damages.
The person making the payments are referred to as the defendant of the lawsuit while the person receiving the payments are called the plaintiff or claimant.
Usually the defendant guarantees the structured settlement payments by purchasing a structured settlement annuity from an insurance company.
The settlement annuity is owned by the defendant or their insurer or other assigned party. The annuity is not owned by the person receiving the payments
The person receiving payments owns the right to receive payments under the settlement. This is considered their personal property that they can assigned to others.
Often people receiving the structured settlements may require a lump sum of cash versus the monthly payment. Some people may need cash for a new business venture, unexpected medical emergency, or other financial need.
They may consider to sell their rights to collect the structured settlements to an investor that purchases these types of cash flows.
It should be noted that investors typically will not buy all the payments of someone unable to work due to a disability or those needing the payments for medical necessities.
Anyone considering to sell structured settlements should obtain the competent legal advice before doing so.
