Massachusetts Personal Injury Library
What are Structured Settlements?
You’re trying to recover from a serious accident. Because of your smart decision to retain a Massachusetts injury lawyer, the person or entity who is responsible wants to agree to a settlement. Their attorneys are recommending that you be compensated through a structured settlement. But what are structured settlements?
Definition of a Structured Settlement
A structured settlement calls for an issuance of payments over time instead of a one-time lump sum disbursement. In other words, you as the claimant would receive money on a monthly, quarterly, or annual basis for a defined number of years or throughout your lifetime. Structured settlements are often implemented when a defendant’s insurer opts to purchase an annuity instead of paying out a large amount of money at once.
Structured settlements are common when there are substantial ongoing costs associated with a personal injury case. For example, a person who suffers a spinal cord injury in a truck accident might require multiple surgeries, extensive physical therapy, or even constant medical care. Because these costs will be incurred well into the future, a structured settlement might be appropriate.
Benefits of a Structured Settlement
There are several benefits which a structured settlement can provide and which a lump sum payment cannot, including:
- You cannot spend it all in one place. When a large amount of money is paid out all at once, it is often completely spent within 5 years (statistically speaking) – leaving an accident victim broke and welfare-dependent. But because a structured settlement only pays a predetermined portion of the award at regular intervals, the funds are guaranteed to still be there in the future.
- You get to keep more of your settlement from Uncle Sam. Funds received from an annuity based on a structured settlement are tax-free as long as the money is overseen by someone other than the recipient. One-time cash awards are usually taxed as heavily as normal income.
- You get to design it the way you want it. Structured settlements can be tailored to fit the specific financial needs of the recipient. For instance, a 20-year annuity could be arranged to provide a larger quarterly payout 2 years into the future if additional surgery will be required, or a smaller one if a plaintiff’s children move out of the house in 5 years.
Disadvantages of a Structured Settlement
As with any financial instrument, there are also certain drawbacks to structured settlements, such as:
- You may be worried about the future. As recent history suggests, today’s balanced budget may be tomorrow’s debt-ridden lifestyle if the economy drastically changes. Some plaintiffs may be concerned that a set-in-stone payment amount might not meet their future financial needs.
- You may not trust whoever handles your settlement. By law, annuity brokers are obligated to keep payments flowing even if they declare bankruptcy. But if you get stuck with an entity that decides to flout the law, your entire structured settlement could be jeopardized – and recovering what is owed to you may be difficult or even impossible.
- You may not be getting the whole story. During settlement negotiations, defendants and their insurance companies are often secretive about how much they will pay to purchase an annuity for a structured settlement. As a rule, annuities cost an insurer less than a lump sum payment. With that in mind, it may be difficult to determine whether your settlement offer is being undervalued.
Before accepting any sort of structured settlement offer, you should definitely seek the advice of an experienced Massachusetts personal injury lawyer. It would be in your best interest to consult with an experienced personal injury attorney that specializes in cases similar to yours.
Truck accidents
Structured settlements are common in cases of truck accidents. This is because the heightened severity of the injuries associated with this type of accident and the lifetime of medical costs that can be associated with a victim’s recovery.
Trucking companies can be held liable for a truck accident if it can be proven that they were negligent in: the hiring of the truck’s driver; ensuring proper licensure; entrusting the truck driver with the truck; and/or maintenance or proper equipping of the truck. A lot can be at stake for the company if they are found to be at fault.
As always, accepting a structured settlement will likely waive your right to seek further compensation down the road, even if your condition worsens. For that reason, you should always rely on legal advice from your attorney prior to signing any paperwork. This can help ensure that you receive compensation equal to the damage your truck accident-related injuries will cost you in the long run.
If you, or your loved one, have been injured in an accident in the Boston area, it would be in your best interest to contact an experienced personal injury attorney who will protect your rights and ensure you get the justice and compensation you rightfully deserve. Massachusetts has a statute of limitations that may prohibit you from filing a lawsuit if too much time has passed. Call our Boston accident law firm today for a FREE evaluation of your case – (888) 208-1695.
