Important Facts To Know About Structured Settlements
The fact is that people go through events in their lives that change everything; including being involved in a lawsuit that results in a structured settlement. The decisions that an individual makes about this structured settlement could affect their entire life situation. These decisions could be overwhelming to the individual who is going through the process. Grasping the facts about structured settlements is important so that an individual has the knowledge they need to make an informed choice when having to make the decisions surrounding the financial security of a structured settlement for the individual who has been awarded the settlement.
You should know why structured settlements were formed. They were formed to give an alternative to a lump sum settlement. All too often people who had received a lump sum payment were in dire straits for their medical and personal needs some few short years later. The structured settlement provided individuals with a choice to receive periodic payments that would be received over an allotted period of time or until that individual were to pass away which would allow the individual to have a stability financially.
You may wonder what the advantage is of taking a structured settlement over a lump sum payment. One of the biggest advantages to taking a structured settlement over a lump sum payment is that the structured settlement is freefrom taxation. According to IRC 104 (a) (2) in bodily injury cases all payments made to the plaintiff are excluded from taxation. Should the injured party choose a lump sum that was tax free and reinvested the money, the interest would the be subject to taxation. Choosing structured settlement payments allows the principal and the interest to be free from taxation.
Another advantage of taking the structured settlement over the lump sum is that you have choice in how to receive the payments. You can choose to receive the payments as best fits your needs. Should you think that your needs would warrant you receiving the payments every month then you can set the payments to receive them as such. You also can choose to set them so that you receive them once a year on a certain date. Now I do not know about you but around the end of November sounds like a real good time to receive a lump sum payment that is tax free.
You may wonder if inflation is factored into the structured settlement payment. As a matter of fact it is. With the economy in the state that it is in everyone is concerned about inflation. Your structured settlement has factored in this component so that you do not have to worry so much about the stability of your income fitting the monetary needs of the moment because of inflated prices.
There are many facts that an individual needs to be aware of when they are trying to make a choice about structured settlements. It is always advisable to seek out counsel from the legal perspective when trying to make an informed decision about a structured settlement or a lump sum. Get informed and make a sensible decision that meets your needs now and for the future.
You should know why structured settlements were formed. They were formed to give an alternative to a lump sum settlement. All too often people who had received a lump sum payment were in dire straits for their medical and personal needs some few short years later. The structured settlement provided individuals with a choice to receive periodic payments that would be received over an allotted period of time or until that individual were to pass away which would allow the individual to have a stability financially.
You may wonder what the advantage is of taking a structured settlement over a lump sum payment. One of the biggest advantages to taking a structured settlement over a lump sum payment is that the structured settlement is freefrom taxation. According to IRC 104 (a) (2) in bodily injury cases all payments made to the plaintiff are excluded from taxation. Should the injured party choose a lump sum that was tax free and reinvested the money, the interest would the be subject to taxation. Choosing structured settlement payments allows the principal and the interest to be free from taxation.
Another advantage of taking the structured settlement over the lump sum is that you have choice in how to receive the payments. You can choose to receive the payments as best fits your needs. Should you think that your needs would warrant you receiving the payments every month then you can set the payments to receive them as such. You also can choose to set them so that you receive them once a year on a certain date. Now I do not know about you but around the end of November sounds like a real good time to receive a lump sum payment that is tax free.
You may wonder if inflation is factored into the structured settlement payment. As a matter of fact it is. With the economy in the state that it is in everyone is concerned about inflation. Your structured settlement has factored in this component so that you do not have to worry so much about the stability of your income fitting the monetary needs of the moment because of inflated prices.
There are many facts that an individual needs to be aware of when they are trying to make a choice about structured settlements. It is always advisable to seek out counsel from the legal perspective when trying to make an informed decision about a structured settlement or a lump sum. Get informed and make a sensible decision that meets your needs now and for the future.
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