Structured Settlements

<h1>Structured Settlements - the Basics</h1>Author: <a title="Greg Chan" href="http://www.articlesbase.com/authors/greg-chan/81523.htm">Greg Chan</a> Are you a victim of malpractice or personal injury? If you win a large case, you may have the option of getting a structured settlement. In a structured settlement, instead of getting paid in one lump sum, payments are made to you over time. Structured settlements are often set up by purchasing several annuities to guarantee payments over a long period. But why would anyone want to get paid over time instead of all at once?
 
The main advantage of a structured settlement is tax avoidance.  If set up properly, plaintiffs can have significantly less of a tax burden.  In some cases, structured settlements may even be tax-free.  By guaranteeing an income over a period of time, structured settlements can also protect plaintiffs from themselves.  Many people do not know how to manage their finances or cannot say no to family or friends.  Structured settlements essentially provide an "allowance" that would make it difficult for plaintiffs to splurge.
 
Many, however, feel that structured settlements may limit their options.  For example, plaintiffs sometimes have difficulty purchasing a home, or other large ticket items, if they are not allowed to borrow against future payments.  In addition, you may do better financially with a lump sum payment.  Other types of investments may give better rates of long-term return.  In addition, one should be wary of excessive commissions for annuities.  
 
When considering a structured settlement, plaintiffs need to be careful of any potential self-dealing.  There have been cases where lawyers pocket a large commission on an annuity that they set up for their clients.  Lawyers have also been known to recommend a financial planner to set up an annuity while collecting a referral fee at the same time.
 
Plaintiffs also need to consider their life expectancy.  Unfortunately, victims of malpractice or personal injury can have a shortened life expectancy.  Since many annuities cease payment upon death, it may make sense to insist that a minimum number of payments are made or that the remaining payments be paid into the plaintiff's estate.  
 
For more information on structured settlements, visit <A href="http://ProTaxFinancial.com/">ProTaxFinancial.com</A>About the Author: Greg Chan is a business and finance expert. He has written several articles on personal finance and structured settlements. For more information on structured settlements, visit <A href="http://ProTaxFinancial.com/">ProTaxFinancial.com</A>Article Source: <a href="http://www.articlesbase.com/">ArticlesBase.com</a> - <a href="http://www.articlesbase.com/personal-finance-articles/structured-settlements-the-basics-561776.html" title="Structured Settlements - the Basics">Structured Settlements - the Basics</a>

Are you a victim of malpractice or personal injury? If you win a large case, you may have the option of getting a structured settlement. In a structured settlement, instead of getting paid in one lump sum, payments are made to you over time. Structured settlements are often set up by purchasing several annuities to guarantee payments over a long period. But why would anyone want to get paid over time instead of all at once?

The main advantage of a structured settlement is tax avoidance. If set up properly, plaintiffs can have significantly less of a tax burden. In some cases, structured settlements may even be tax-free. By guaranteeing an income over a period of time, structured settlements can also protect plaintiffs from themselves. Many people do not know how to manage their finances or cannot say no to family or friends. Structured settlements essentially provide an "allowance" that would make it difficult for plaintiffs to splurge.

Many, however, feel that structured settlements may limit their options. For example, plaintiffs sometimes have difficulty purchasing a home, or other large ticket items, if they are not allowed to borrow against future payments. In addition, you may do better financially with a lump sum payment. Other types of investments may give better rates of long-term return. In addition, one should be wary of excessive commissions for annuities.

When considering a structured settlement, plaintiffs need to be careful of any potential self-dealing. There have been cases where lawyers pocket a large commission on an annuity that they set up for their clients. Lawyers have also been known to recommend a financial planner to set up an annuity while collecting a referral fee at the same time.

Plaintiffs also need to consider their life expectancy. Unfortunately, victims of malpractice or personal injury can have a shortened life expectancy. Since many annuities cease payment upon death, it may make sense to insist that a minimum number of payments are made or that the remaining payments be paid into the plaintiff's estate.

For more information on structured settlements, visit ProTaxFinancial.com

Greg Chan is a business and finance expert. He has written several articles on personal finance and structured settlements. For more information on structured settlements, visit ProTaxFinancial.com

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Article Tags: Personal Finance, Annuities, Payments, Personal Injury, Structured Settlement, Structured Settlements, Malpractice, Annuity, Lump Sum, Tax-free, Tax Avoidance

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