Monthly Archives: June 2016

Know the Risks and Advantages of a Structured Settlement Before You Settle Your Personal Injury Case

How does a structured settlement for personal injury differ from a settlement or award?

A settlement or judgment for a personal injury claim may be paid to the claimant by the defendant or the defendant’s insurance company in a single lump sum payment. The majority of settlements are paid in this way.

But in cases where the claimant (plaintiff) settles or is awarded a large sum of money, they may elect to receive all settlement funds in steady payments or a one-time partial disbursement of the settlement funds with recurring payments disbursed over a period of years or decades. This is called a structured settlement.

An initial partial disbursement of a structured settlement can and should be used for immediate expenses including, but not limited to medical bills, medical devices, convalescence, therapy, career training, special housing and transportation requirements or any other necessities unique to the injured person. The remainder of the partial disbursement may be invested or posted to a banking account to be used for living expenses or unforeseen future necessary expenditures. After the bills are met, the claimant is free to decide what to do with the remaining partial disbursement of funds.

Advantages to structuring your settlement over time

Some studies indicate that recipients of very large lump sum settlements or “windfall” awards frequently run out of the funds necessary to sustain their disabilities throughout the remainder of their lives. Sadly, this scenario may occur when the parent or guardian of an injured child lacks the experience of managing a large sum of money. One of the advantages to a structured settlement distributed over a period of years is the economic security and well-being of the disabled or partially disabled person.

There are also tax advantages to structuring your settlement. Although settlements and awards for physical injuries are generally tax exempt, interest and dividends earned on the investment of a single lump sum asset is taxable. Even if all of the funds received in a structured settlement are invested, the annual tax obligation would likely be lessened due to a reduced investment stream.

Will I make decisions regarding the distribution of my structured settlement?

A structured settlement is funded by way of an annuity purchased by defendant for the behalf of the claimant. When you agree to settle your lawsuit by way of annuity, your personal injury lawyer will facilitate a consultation with a qualified economic and financial analyst who will calculate your monthly or annual financial needs against mortality and inflationary tables. A qualified and trusted financial advisor will discuss your goals and the options available to you, i.e. the sums you wish to receive and the length of time over which you may extend your payments. You may choose to end disbursement of your funds at a designated age, terminate payments upon your death or continue with payments made to your heirs through the remaining life of the financial instrument. You may even elect to withhold regular payments until you reach a certain age to fund your retirement.

Why do insurance companies offer annuities to injured parties?

Because funds are invested in an annuity (a financial instrument that is expected to grow over time) the initial investment made by defendant or defendant’s insurance company is significantly less than the totality of the expected future income stream received by the claimant. Unless the claimant wishes to make a large purchase, such as a home, from a lesser settlement, say, for example, a settlement of $100,000., a structured settlement can be a win-win situation for both parties.

The Structured Settlement Purchasing Industry

The Washington Post recently published a story exposing a predatory company that took advantage of a young adult woman with brain damage and limited mental capacity due to lead paint poisoning as a child. The Baltimore woman had prevailed in a suit filed on her behalf and was tricked into transferring her monthly checks, 420 payments through the year 2052. The estimated value of her annuity was more than a half a million dollars but she transferred her future security for a mere $63,000.

Although most settlement purchasing companies operate legally and within the boundaries of the law, you should understand that the players within the industry will only offer pennies on the dollar for the transfer of an annuity. People who have fallen on hard times or who need a chunk of money to purchase a car or make a down payment on a home may be more easily persuaded to sell the remaining life of their structured settlement. However, Indiana Code 34-50-2 entitled Annuity Structured Settlements regulates the industry in Indiana with a level of oversight requiring approval by the court for a legal transfer of the annuity. Section 7 of Chapter 2 states:

Sec. 7. An Indiana court of competent jurisdiction may approve a transfer of structured settlement payment rights only in a final order that is based on the express findings of the court. The express findings must include all of the following:(1) The consideration that the payee will receive for the transfer reasonably reflects the present fair market value of the future Indiana Code 2015 periodic payments under the structured settlement agreement.

(2) The transfer is in the best interest of the payee.

(3) The transfer will not materially impair the payee’s ability to discharge the payee’s obligations to the payee’s dependents.

(4) If the transferee is the applicant, the transferee has provided to the payee a disclosure statement in accordance with Section 6 of this chapter.

Section 8 of the above-referenced statute goes on to describe the process of filing an application for the legal transfer of an annuity with the court of jurisdiction. After application has been made, the court will notify the applicant of the date, time and place of the hearing but it will not be heard earlier than 20 days after the application has been filed with the court.

Personal injury attorneys experienced with structured settlements

Many of our clients have elected to receive structured settlements as opposed to a single lump sum settlement. Although structured settlements are not always the right solution, they can be a valuable source of future income, particularly for clients concerned with future income or loss of wages.

When to Sell Your Structured Settlement

An organized settlement frequently takes after an extraordinary occurrence, whether it be sure or negative. Because of these circumstances, you might be confronted with the requirement for an extensive singular amount installment as opposed to little regularly scheduled installments over various years. All in all, where do you turn? To an organization that can purchase your organized settlement from you and transform it into a prompt installment that you may use on whatever you see fit.

Every individual has diverse explanations behind needing to offer their organized settlement, be that as it may, first you should choose on the off chance that it is the right choice for you.

The Benefits of Selling Your Structured Settlement

A substantial segment of the individuals who get an organized settlement can profit by offering it for a singular amount installment. The circumstances recorded in this segment speak to conceivable circumstances of people that may get the most rewards from offering their organized settlement.

· If you can’t hold up to get little, spread-out installments over a drawn out stretch of time because of a critical money related circumstance or strong doctor’s visit expenses and/or attorney charges. A hefty portion of the circumstances that can achieve an organized settlement can likewise stick the person with such commitments.

· If you and your family conclude this is the opportunity to at long last make that substantial buy that you have had your eye on. For instance, on the off chance that you have already been denied home loans or advances and might want to accept this open door to purchase that fantasy home you have constantly needed. Alternately on the off chance that you have a youngster or kids who are planning to go off to school and you fear you might not have the budgetary intends to backing that fantasy generally.

· If you have chatted with a monetary consultant and both of you feel that you could benefit more by contributing a single amount installment, as opposed to tending to regularly scheduled installments. On the off chance that the cash is contributed appropriately, there is a chance that you could wind up with more cash at last than your settlement was ever worth. In any case, this ought not be an arrangement that is gone into gently. You ought to work intimately with a budgetary authority and feel certain that you have found an extraordinary chance to put resources into.

· If you are of more established age and feel that you may not be around sufficiently long to get a considerable lot of your organized settlement. You may need to the opportunity to appreciate the advantages of your settlement or might need to secure some portion of it for your family after your passing. Along these lines you can disseminate the assets as you see fit as opposed to depending on legal advisors or courts.

· If you don’t plan to utilize the cash immediately, however would rather place it into a reserve funds or currency market record to draw premium. This would be most appropriate for somebody who has an exceptionally powerful settlement, can discover a record with huge result terms, and plans to keep most of the cash in the record for a long time.

Regardless of what your explanation behind needing to offer your organized settlement, picking this choice returns you in control of cash that is properly yours. The issue that numerous people have with their organized settlements is that the control over their cash is left to legal counselors, courts, and the organization or people paying out the settlement. You are presently ready to say where, how, and – in particular – when you spend your cash.

The Drawbacks of Selling Your Structured Settlement

For a couple of people, offering their organized settlement and getting a single amount installment may not be to their greatest advantage. One should likewise assess these circumstances and figure out whether they exceed the reasons you are thinking about offering your settlement.

· First and premier, offering you organized settlement implies that you will get less cash than you would if you somehow happened to keep it. In any case, for some individuals considering this alternative, this appears like a win-win circumstance – they will get one substantial singular amount installment and the organization they sold it to will make a benefit at last. The uplifting news is that since you have a few organizations seeking your settlement, you can pick the one that will give you the a segment of the full settlement that you can live with.

· Because you may miss out on a considerable part of your settlement by offering it, on the off chance that you are in a money related circumstance where customary regularly scheduled installments may be a reward on top of what you as of now make, enduring your settlement might be to your greatest advantage. Notwithstanding, in case you’re a senior, then you ought to likewise take your age and the length of your organized settlement into thought. This would be the perfect circumstance for somebody who is sufficiently youthful that they have an awesome shot of experienced the life of their settlement.

· If you are a man who is poor at overseeing extensive totals of cash, then offering your organized settlement may not be ideal for you. For instance, on the off chance that you are the sort of individual who gets an extensive paycheck like clockwork and winds up running low on accessible money toward the end of those two weeks, then that might be an indication that should be nearly taken a gander at. In this sort of situation, having your settlement assigned out to you on a month to month premise may keep you from spending it too rapidly. Once your settlement is gone, you will be back at the starting point.

· For those reasons, you ought to likewise not consider offering your organized settlement on the off chance that you have a dependence on betting, shopping, or medications.

· If your settlement was because of a mishap that has put you out of work and the assets from it will supplant your month to month pay, then keeping the installments on a month to month premise may help your family keep your accounts all together. In any case, even in this circumstance offering your settlement might be best for you on the off chance that you might want to renegotiate your installments into a bigger entirety every month to abbreviate the life of the settlement.

Most people getting an organized settlement can profit by offering it to an organization that can give them a vast single amount installment or abbreviate the life of the settlement, particularly on the off chance that they are more established people, a person who has tremendous costs because of a mischance or court case, somebody in a basic money related position, or one who wishes to make a substantial buy for themselves and their family. Finding the right organization with terms that fit your needs is a key part of making your involvement with offering your organized settlement a positive one.