Advantages of a Structured AgreementAdjustments for cost of living. A structured agreement can be established taking into account fluctuations in the cost of living. The main advantage of a structured settlement, in addition to the limitations on waste, is the tax-free status of the profits involved. All settlements are tax-exempt, but if you invest that money and earn interest, that accrued interest is taxable.
Interest earned on the annuity of a properly structured settlement is not taxable; they are all considered part of the settlement. If you find that your expenses increase while you wait for your first structured settlement payment or initial lump sum, you may want to consider pre-settlement financing options to help you. There are many reasons to consider using structured settlement annuities to resolve your personal injury or taxable damage case. Another disadvantage is that the return on a structured settlement annuity is established when it is purchased, which means that you are subject to prevailing interest rates.
You can “collect” your future structured settlement payments by selling them to a factoring company at a discount if you need immediate cash. If you choose to receive your prize in a structured settlement, you will receive periodic payments for a certain number of years. A structured settlement may be ideal as part or all of the financing of a special needs trust for a disabled beneficiary, due to its tax benefits, its ability to provide stable income, and the guarantees of major insurance companies. A vital and most favored benefit of the structured agreement is the security and peace of mind of knowing that the money will be there when needed.
Using structured settlement to fund a special needs trust can also reduce administration costs, since only trust assets will be subject to charges. When it comes to settlement plans, lawyers and clients are most likely familiar with a structured agreement. A major drawback of a structured agreement is that it can jeopardize the beneficiary's eligibility for public benefits, which can be particularly problematic when the person's medical needs are covered by Medicaid rather than private health insurance. A structured settlement annuity is a tool that helps a claimant ensure that the funds in a settlement are available in the future.
A qualified transferee will be appointed to structure such payments and purchase an annuity from an insurance company. Structured settlements are essentially contracts with insurance companies, in which the insurer undertakes to make regular and continuous payments, also known as annuities, over a period of time or, as is particularly the case with younger victims, for the life of the beneficiary. These trusts can be used to maintain a beneficiary's eligibility when they receive a lump sum payment or a structured settlement if the payments are made in the trust's name. A structured settlement is an excellent option for you if you want to receive your personal injury case adjudication payments over a period of time.