How a Structured Settlement Work? (And Why You Should Get One)
Did you know that in 2019 the average settlement amount in the USA was $27.4 million? People receive settlement amounts for many different reasons. However when they do it is generally a life-changing amount of money.
It is is very important to consider how to receive this money. A misunderstanding of the law or poor use of that amount of money could lead to a person using or losing it quickly.
For this reason, many people are starting to turn to structured settlement payouts. What are structured settlements and how can you benefit from them? Why not read our in-depth article to find out.
Legal Implications
Structured settlement payments are different from other forms of financial income. For example, they are not counted as income for tax purposes. This is true even if the structured settlement raises in value because of added interest over time.
Structured settlement payments do not affect your eligibility for state financial support. This could include Medicaid, Social Security Disability benefits, and other benefits. This is also true for interest accrued.
If a person takes a structured settlement payment option, but then the person passes away, a designated person will continue to receive the remaining payments.
Payment Structures
It may seem strange to make the decision not to take a lump sum settlement. However, there are definite benefits to taking a deferred payment structure.
You can schedule the payments to start at any time and structure each payment amount as you would like. If you are expecting to face a large expense in the future, for example, a medical expense, you can schedule a large payment for that time.
Often people choose to take a structured settlement because they know themselves. They understand that they need to save that money and use it carefully rather than spending it all at once. This is especially important if you will have long-term medical treatments.
Payment Protection
Structured settlements come with protection. For example, they are not subject to market changes and fluctuations.
In the event that the structured settlement provider company goes bankrupt, payments are guaranteed to be made. This is because these companies are covered by insurance guaranty associations, which the state will support.
Interest Rates
As mentioned, a structured settlement will gather interest over time. This leads to an even larger final amount than if you had taken a lump sum.
Structured Settlement Payouts and Much More
If you are offered a settlement, you need to think long and hard about how to use it in the best way. You may find that a structured settlement works best in your situation. They can offer you the chance to receive guaranteed payments over a period of time that can benefit you and your family.
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