This takes the form of structured settlement annuity purchased agreed to make payments owed to you. One might ask: “Why can not I have the amount awarded in court I am in a lump sum?”. Depending on where you live, which may be an option, but states are increasingly requiring that the settlements structured time.

The reason for this is to protect you as the person getting the money to spend money so negligent, that jeopardizes your future financial well-being.

Consider a real example.

In 1973, Tiffany Adams was born in Memphis with severe brain damage that his parents blame their doctor. They sued for negligence and received a cash payment of $ 250,000 in one installment.

The family lawyer you should invest money to create an income that might help to take care of Tiffany in her life.

Well, as it did not happen, you can see where this goes.

Tiffany’s parents wasting money with his father. In just over 10 years, the money to take care of Tiffany was gone.

A few years later, divorced parents and Tiffany receives no children. If this were not enough, in 1987, Tiffany had an accident with his wheelchair, which caused serious injuries to his face. The family has won a new colony of the company in a wheelchair.

This time, however, Tiffany’s mother has insisted on a structured settlement payments. In this way, Tiffany’s mother to take care of her daughter without the fear of having someone take advantage of its rules.

Malpractice and accidents are things that can not control. What you do, however, with the settlement money you receive is something you can.

Be prepared and be informed.

protect you and your family, looking for structured settlements and structured settlement annuities.

There are certain advantages and disadvantages associated with structured settlement. These advantages and disadvantages apply to both the Plaintiff and the Defendant.

One main advantage of a structured settlement for the Plaintiff is that all periodic payments are tax free to the recipient in contrast to lump sum payments where interest earned from plaintiff’s investment is taxable. The other advantages are the fund can not be spent too quickly and carelessly and the money is managed without any cost to the Plaintiff.

Some disadvantages of structured settlement for the Plaintiff are the fund is locked at a fixed interest rate and cannot be cashed out from the settlement at a later date. Since the annuity is set at a fixed interest rate, if the inflation rate increases and becomes higher than the indexing rate, the purchasing power would be significantly reduced.

An advantage of the structured settlement for the Defendant is cost saving. It is much cheaper to purchase and annuity than to invest a lump sum which would provide same stream of net income for the Plaintiff. Also the structured settlement may contain clauses which may ensure that the remaining payments are made to the Defendant in case the Plaintiff dies before expiration of the guarantee period.

The disadvantages to the Defendant are the Defendant is responsible and liable for all payments for the duration of the annuity and a need for bookkeeping for taxation purposes.