Victims of personal or workplace injury may be eligible to receive personal injury settlements or lawsuit awards over time with a structured settlement. Many clients wonder, “What is a structured settlement and how does it work?”
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What is a Structured Settlement?
Learn why structured settlements are the best option.
An Introduction to Structured Settlements
A structured settlement is a tax-free, negotiated lawsuit settlement that is dispersed through a stream of set payments to a claimant who won a civil lawsuit. Personal injury plaintiffs who win or settle their cases may be eligible to choose to take their winnings over a structured settlement payment rather than a single lump sum payment. Structured settlements may be mandated by the court or negotiated by lawyers before a trial ends.
The settlement is paid by the defendant who is responsible to right a wrong against the injured party. Payments are made until the total amount due is paid in full.
If a plaintiff chooses to take an award as a structured settlement rather than a lump sum payment from the defendant, they will receive regular, periodic payments over a fixed period of time. For example, if someone is awarded $200,000, the defendant might be required to pay them $20,000 every January for ten years.
Some examples of personal injury cases that may be eligible for structured settlement payments include:
- Workplace accidents
- Auto or motorcycle crashes
- Physical injuries, such as slip and fall
- Injury due to side effects from pharmaceutical drugs
- Injury due to medical malpractice
- Wrongful death
Comprehensive Settlement Solutions
Comprehensive Settlement Solutions
Structured Settlements
Quest Settlements offers expert services for structured settlements, making sure you get your money when you need it.
Attorney Fee Structures
Since 1996, we have helped attorneys to successfully structure their contingency fee payments in order to defer income and associated taxation.
Special NeedsTrust
Our experienced settlement consultants work closely with attorneys and their disabled clients to set up special needs trusts.
Medicare SetAsides
Over the years, our settlement consultants have assisted attorneys and their clients with setting up the funding for Medicare Set Asides.
Non-Qualified Annuities
We are a top provider of non-qualified annuities, helping countless attorneys and their clients get set up with the specific structures they need.
Qualified Settlement Agreements
Our settlement consultants have decades of experience helping attorneys and their clients set up Qualified Settlement Funds.
How do Structured Settlement Annuities Work?
A structured settlement agreement governs the terms of the structured settlement. A structured settlement annuity is a contract that details the terms including the total amount due by the defendant. An annuity can be purchased from a life insurance company by the defendant. This enables the defendant to remove any obligation from their own books, transferring the responsibility for payment over to a company that has experience in managing periodic structured settlement payments.
The Structured Settlement Agreement Process
The plaintiff first sues the defendant to pursue compensation for an injury, illness or death caused by the defendant. Oftentimes the defendant will agree to compensate the plaintiff through a structured settlement (sometimes to prevent the case from going to trial). If the case does make it to trial, the judge may force the defendant to set up a settlement.
The plaintiff and defendant work together with a qualified assignee to determine the structured settlement agreement terms, including how much the total payments will be and how often they will be paid, as well as any other pertinent details pertaining to frequency and duration of payments.
The qualified assignee then may purchase an annuity from an insurance company to set up an annuity contract to meet the needs of the settlement. Once the structured settlement annuity terms are set, they cannot be altered.
The insurance company then pays the plaintiff on behalf of the defendant over a period of time, according to the terms of the annuity contract. An annuity earns interest in order to protect the value from inflation.
What is a Structured Settlement Company?
A structured settlement company, also referred to as a factoring company, purchases all or a portion of structured settlements or annuity payments in exchange for a lump sum of cash at a discounted rate.
Structured settlement or annuity buyer’s play a vital role in the annuity sale process. A structured settlement broker will examine the details of the settlement or annuity and offer a quote of how much they are willing to pay for any future payments.
Selling a structured settlement must be approved by a judge, as it is a legal process. If a client decides to move forward with the structured settlement or annuity sale, a claim will need to be made in a state court. If the sale is approved, the buyer will pay the agreed amount to the client in exchange for any future payments.
Quest Settlements is the best structured settlement company that will go to bat for you and your clients. We spend our time and energy on getting the most cash for their payments with the best customer service around. We offer a quick turnaround with a great track record. Because our team has been in the industry for many years, we have the experience and knowledge in the structured settlement field.
What are the Benefits of a Structured Settlement?
Regardless of the design of a particular settlement, structured settlements offer many distinct advantages over lump sum payments that often benefit all parties involved.
Tax-free, Lifetime Income
Income from a structured settlement is tax free if the settlement is for physical illness or sickness. Lifetime payments can offer lifetime income to the plaintiff.
Fiscal Restraint
A structured settlement prevents a plaintiff from squandering the money they receive in a short period of time. This reduces the temptation to spend all of the money on extravagant, large purchases.
Guaranteed Payments
The payments of a structured settlement are guaranteed by the insurance company that issues the annuity. Even if the insurance company became insolvent, the state’s insurance guaranty association will protect from loss.
Higher Yield
In many cases, a structured settlement annuity often yields more money in total than a lump-sum payout due to interest earned over time by the annuity.
They can be designed to tailor individual needs.
Large lump sum. A large lump sum can be paid to the plaintiff initially so they can pay off any bills that are overdue, obtain funds from lost time at work as a result of injury, purchase needed items like a new car or pay off a mortgage. They can then request smaller subsequent payments thereafter.
Yearly income. Some structured settlements are designed to offer yearly income and may include additional amounts of money to pay for extraordinary expenses, such as college tuition.
Payments decrease over time. Some structured settlements can begin high and decrease over time. If a person’s income is expected to increase over time, this might be a good option.
Payments increase over time. In other cases, payments can be designed to step up over time, starting smaller and ending in larger amounts.
They can benefit the defense.
The defendant may benefit through a faster and more efficient resolution process, with potential for a reduced cost of prolonged litigation. The defense may also feel more secure by knowing all future payments will be met by assigning payment obligations to a financially sound third party.
How Quest Settlements Helps Lawyers Help Their Clients
A quick internet search will reveal many structured settlement consultants, but the experts at Quest Settlements have the necessary experience with 30 years of combined knowledge in the industry and an unsurpassed commitment to excellence.
We understand that personal injury can have a dramatic and devastating impact on the lives of victims and their families. Our skilled structured settlement consultants work together with claimants and their lawyers to ensure effective solutions are met, obtaining the necessary funds for living expenses, medical expenses and more.
From settlement planning to settlement taxation, public benefit preservation and liens, setting up settlements is complicated today. Many lawyers tread lightly when it comes to setting up settlements, as there is a fine line to walk. Many personal injury attorneys steer away from handling them altogether, outsourcing them to structured settlement planning companies out of fear of staining their reputation with claims gone awry.
Structured settlement planning requires expert guidance from someone who is up to date on the ever-changing facets of the law in addition to ethical responsibilities. When you are maintaining your own law firm and other clients, pouring time and resources into structured settlements is not to your best advantage. Do not underestimate the importance of pursuing an expert structured settlement planning company for our case to help you and your client through the complexities involved.
We also offer our unique Settlements Plus program, which couples the tax benefits of a structured settlement and those from market related returns to enable clients to maximize settlement income. We are happy to help you and your client navigate through the complexities while helping them to reap the most benefits to stretch funds.
Certain types of settlements do not qualify for income tax exclusion and are considered to be a non-qualified annuity. A non-qualified assignment may involve a claimant with a non-physical injury case
to place some or all of the proceeds from a settlement into a structured settlement. We can help you and your clients with setting up non-qualified annuities as well.
The qualified settlement consultants at Quest Settlements are ready to help you and your client reach the most effective settlement goal possible that meets their unique needs. You can rest easy, knowing your clients are taken care of and will get exactly what they need from their settlements while freeing you up from the burden of figuring out all of the details and doing the work. Call us today for a free case consultation.
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