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Structured Settlement Agreement: What You Need To Know

A structured settlement agreement is what is usually offered to settle a case where an individual has been injured. It may be as a result of a vehicle accident, medical malpractice, workplace injury, or any other of the many types of personal injuries that can befall a person.

What this settlement does is provide payments to you in a structured, or planned, fashion. This is so that you would have a steady flow of income well into the future, or even for the rest of your life.  You can even specify if you want equal-installments, or payments in varying amounts.

Very typically, these structured settlements will provide a lump sum payment up-front to take care of legal fees and medical expenses. The legal instrument used to define these payment terms is an annuity agreement. If a person has been injured to the extent that they cannot work, the structured settlement will be set-up in such a way as to provide a regular source of income, so that you could pay rent or mortgage payments, utility fees, and to purchase food and clothing.

Long Term Financial Security

The object is to provide long term financial security to the claimant. These payments are not subject to income tax. Life Insurance companies are the people that back these annuities, so you must make sure that they are sound. By using a competent structured settlement company, such as Einstein Structured Settlements, you are guaranteeing that the life insurance companies used are top rated.

A structured settlement is a typical out-of-court settlement. This process reduces emotional turmoil of all involved, as well as cut legal expenses, resulting in a larger monetary amount for the injured.

The Agreement Is Set In Stone

Once a structured settlement has been agreed upon, it is very difficult to modify it, which is why it is critical to know what you are doing when crafting the agreement. If a structured settlement is in fact modified, it can change the tax classification resulting in the recipient being charged with income tax. You should be aware of the fact that when these structured settlement payments are made to an Estate, they will be subject to an Estate Tax.

While it is very difficult to change the terms of a structured settlement, it can be sold for a lump sum of cash. This is great news to a recipient that finds themselves in financial straights after a few years has passed. When the economy took a downturn, many people found themselves without jobs, and about to lose their homes.

If you were one of the lucky folks who were in possession of a Structured Settlement, you could sell it at a discount rate for a lump sum payment. What you are doing is giving up future income, for a lump sum now, when you need it. You could even put this lump sum in the bank and take out a loan with the best interest rates around.

You don’t even have to sell the entire settlement. Maybe you only feel that selling half of it will give you the cash you need now. It is all dependent on what your needs are. When you create your structured settlement agreement, use a professional firm like Einstein Structured Settlements for the best outcome.