Types of Structured Settlements
Structured settlements are lawsuit awards that are given to the recipient in a stream of periodic payments, usually over many years. They are designed to provide an injured person or the family of someone who was harmed by another’s negligence with the ability to pay for life’s necessities.
The government grants favorable tax treatment to structured settlements because these settlements keep injured people and their families from relying on public assistance to provide for their needs. Structured settlements are also not considered a gain in income; rather they meant to help people return to their financial condition before they were harmed.
Because of this, the types of cases considered appropriate for structured settlement generally involve serious injury or death.
Structured settlements, as compared to lump-sum awards, are periodic payments given to the prevailing party in a lawsuit over a period of years.
Examples of Structured Settlements
The types of cases that may be resolved with structured settlements are varied. Here are some structured settlement examples:
How Do You Get a Structured Settlement?
According to the National Structured Settlements Trade Association (NSSTA), structured settlements can be best suited for people who most need this stream of income to support their needs. Often, these are people who are unable to work and their dependents:
- These individuals may have disabilities, which could be permanent or temporary. The disabilities may prevent them from holding employment and may result in ongoing expenses for medical and occupational needs.
- People who suffered other severe injuries that created the need for long-term care may similarly benefit from structured settlements.
- Juveniles, people who have been found incompetent or those who have ongoing financial needs as a result of the injuries claimed in the legal case are often awarded structured settlements.
- In wrongful death cases, structured settlements are awarded to surviving spouses and children to help them meet financial needs that were previously filled by the deceased.
- More than half of all Vaccine Injury Compensation Fund claims for young children that were physically injured by vaccines are resolved with structured settlements.
In general, the more serious the injury, the more likely a structured settlement will be used, according to surveys cited by NSSTA.
Types of Structured Settlement Payments
Structured settlement payments are typically distributed through annuities. The payment schedules vary depending on the type of annuity selected.