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Structured Settlement – Guaranteed Income For Those With Disabilities
By: Charles Essmeier
Up until twenty years ago, anyone who won a lawsuit as a result of a claim
involving worker’s compensation, wrongful death or accident had to accept a lump
sum payment as their compensation. The payment would be intended to be invested,
with the beneficiary living off of the proceeds for as long as their recovery
was expected to take.
In many cases, this type of settlement works fine, but in other cases, the
results are a disaster.It is difficult enough for someone who has been through
the trauma of an accident or illness to have to adjust to a new lifestyle
without having to also become an expert in the art of financial investing. If
you have been active all of your life and you suddenly find yourself in a
wheelchair and having to handle assets of several hundred thousand dollars or
more, you could be overwhelmed. You could hire someone to handle the investments
for you as well as the tax issues, but what if the person you hired wasn’t
trustworthy?
What if you hired a greedy relative who took all of the money? What if you hired
someone incompetent? These problems, and statistics that show that people who
receive large sums as compensation for accident, injury, or wrongful death often
spend all of their money in a short period of time, led to Congressional action
in 1982 that amended the Federal tax code to allow for structured settlements. A
structured settlement is simply an agreement between the responsible party and
the injured party that the payments will be made over time, rather than in a
lump sum.
The two parties reach an agreement, the party responsible for payment purchases
an annuity, usually through an insurance company, and the injured party will
receive steady income over a period of years or even a lifetime.The payments are
adjusted for inflation; the sum of all of the payments will be greater than if
the amount had been paid as a lump sum. Because the payments are purchased up
front as an annuity, the paying party actually pays less than the sum of the
payments, as well.
The result is generally a win-win situation, with the injured party receiving a
steady stream of income over as long a period of time as necessary, while the
paying party does not have to worry about making monthly or annual payments.
While a structured settlement is not the ideal payment arrangement in all
situations where a long term injury settlement occurs, it does work well in many
cases where a lump sum payout might be undesirable.
About the Author:
©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro
Marketing, a firm devoted to informational Websites, including
www.StructuredSettlementHelp.com/
and
www.HomeEquityHelp.net/ |
