In essence, a structured settlement is a guaranteed normally tax-free annuity stemming from a lawsuit settlement.
It refers to the ways of settling or paying for damages in a lawsuit for a specified period. Installment payments are normally stretched over a period of time per the settlement agreement.
As with legally awarded or required compensation for death or wrongful injuries, structured settlement payments are almost always tax-free. If recipients use the cash to create a gain, like capital gain, investment growth, or interest, that portion, the income from the growth, becomes taxable.
A structured settlement is typically used for larger settlements. For recipients, a structured settlement is an assured flow of income, which will last as long as the agreement arrangements have been in place.
How Structured Settlement Works
Legal settlements are typically paid out in the form of a lump sum or through structured settlements where the periodic payment are made through an insurance company and referred to as annuities. So the parties involved in the settlement agreement will need to work through which option is best suited for the case.
When plaintiffs receive settlements through a one-time lump sum, one risk is that they may spend in ways that do not benefit their long-term well-being, which future payments may have protected.
Conversely, annuities are meant to offer income over the course of time, which will ensure they can’t spend all the money on things that do not benefit their long-term well-being.
Types of Structured Settlement Companies
As a seller, you might require lump sum payments for different reasons, like outstanding medical bills or paying for a new home. If you are looking to sell your structured settlement, here is a company where you can contact the customer service reps to get no-obligation and free quotes:
We Pay More Funding
This company can help you get more cash faster when you decide to sell future annuity payments to get a lump sum of money. We Pay More Funding is among the structured settlement companies that purchase annuities across the US. With much experience under their belt, they can have the legal work done both correctly and quickly.
Plus, thanks to its knowledge of the business, it can leverage industry and technological development best practices, enabling them to keep its operating costs in the industry low and free up more cash for them to make its purchase offers.