What is a Structured Settlement?

Structured Settlements are primarily utilized for settling claims involving personal physical injury with a qualified funding vehicle (usually a single premium annuity) resulting in a tax-free customized stream of payments for the claimant.

According to Wikipedia: A structured settlement is a negotiated financial or insurance arrangement through which a claimant agrees to resolve a personal injury tort claim by receiving part or all of a settlement in the form of periodic payments on an agreed schedule, rather than as a lump sum. As part of the negotiations, a structured settlement may be offered by the defendant or requested by the plaintiff. Ultimately both parties must agree on the terms of settlement. A settlement may allow the parties to a lawsuit to reduce legal and other costs by avoiding trial.[1] Structured settlements have become part of the statutory tort law of several common law countries including Australia, Canada, England and the United States. click here for source

According to Forbes: Structured settlements are tax efficient and can have asset protection and spendthrift advantages too. Like other tax deferral ideas, their results are more impressive the longer their term and the slower they pay out. click here for source

You Have Unique Needs.

By embracing a structured settlement, you’re providing for critical needs that may arise for you and your loved ones. In the process, you get to keep all your gains, without having to pay income taxes. Structured settlements are designed to protect you, to perform for you, and to give you peace of mind.

What exactly is a structured settlement?

It’s a settlement that includes future payments designed to match your future needs and goals.

Are the payments really income tax-free? (Federal, State, and Local)

Yes - If the settlement is made on account of a physical injury, physical sickness or wrongful death.

Why are they income tax-free?

Congress was seeing too many people exhausting their settlements quickly and they wanted to provide an option to safeguard the public.

Where does my money go?

The parties settling your claim or lawsuit fund the agreed-upon payments with specialized annuity contracts. These contracts are not available to the general public and are issued by some of the leading life insurance companies in America.

Could I do better in outside investments?

Maybe. Maybe not. What is clear is that because of the tax-free status of the payments, structured settlements offer returns higher than those normally available in low to moderate risk investments. To get a higher return you will have to take on higher risk and greater uncertainty - not always the best idea after going through what you’ve gone through. Guaranteed is good.

What type of payments are available?

Just about anything you can imagine: Future lump sums. Income. For a set period. Over a lifetime. Over two lifetimes. Paid monthly, quarterly, semi-annually, annually. Level. Increasing. Now. Next year. In fifty years. Everything in between. One of the above. All of the above.

Are there any other benefits I should know about?

Yes - a structured settlement is an effective way to protect yourself or a loved one from spending through settlement funds too quickly. It can safely distribute funds for many years, or over a period of time designed to ease one into the responsibilities of managing a larger sum of money. Unlike non-guaranteed investments, a structured settlement has no ongoing investment expenses.

How safe are they?

Structured settlements are funded by some of America’s strongest life insurance companies. Many of these companies have been in existence for over 100 years - through recessions, depressions, and World Wars. Some have been keeping promises since before the Civil War. They’re safe.

Why should I consider this option?

Peace of mind. Guarantees. Tax-free interest. One less thing to worry about. Protecting the money from the constant temptation to spend it too quickly. Protecting it from bad investment results. If it’s important, it’s worth guaranteeing. If you only get one shot, don’t miss.

The Valdez Team works with clients primarily in San Diego, Los Angeles and Las Vegas - with additional clients around the nation. Our team focuses on Settlement Planning & producing Structured Settlements for personal injury, medical malpractice, elder abuse, workers' compensation, product liability, mass torts, and construction defect cases. In addition, we also have the ability to create Structured Settlements for non-physical injury cases and attorney fees.

What is a Structured Settlement?