A structured settlement is when a plaintiff (a workplace injury victim) agrees to be paid part or all of the compensation over a period of years.
If you were injured at work and plan on filing a workers’ comp claim, you’ve probably heard of structured settlements. And if you’re like most people, you’re probably curious to know what structured settlements are and how they work. Let’s consider the answers to these questions.
What Are Structured Settlements and How Do They Work?
A structured settlement is when a plaintiff (a workplace injury victim) agrees to be paid part or all of the compensation over a period of years. The money is transferred to a different insurer or third-party company.
What Procedures Comprise a Structured Agreement Process?
Below are the steps involved in drafting and implementing a structured settlement agreement:
- The plaintiff sues the defendant for harm caused.
- The plaintiff and defendant discuss and settle on a good compensation settlement plan. In most cases, the defendant will prefer an out-of-court settlement plan as a court trial may take longer, and they may pay more.
- The defendant and plaintiff approach a competent representative to help them determine the terms of a structured settlement agreement. Key issues in a structured settlement agreement include deliberations on the compensation amount and period. Once this is agreed upon, the defendant gives the qualified assignee money to buy the plaintiff an annuity.
- The representative purchases an annuity from an insurance company and sets it up.
- The insurance company then pays the plaintiff the agreed amount in a stretched period as agreed in the compensation settlement contract.
Advantages of a Structured Settlement
Here are some of the benefits of a structured settlement:
- Financial security. Structured payments guarantee continuous and long-term income.
- Structured settlements offer a guarantee that all medical, living, and rehabilitation expenses are catered for.
- Structured payments are generally exempted from federal and state tax.
- Compared to a single payout, structured settlements reduce the risk of spending the money too quickly.
Disadvantages of a Structured Settlement
Once the terms of a structured settlement agreement are finalized, you generally cannot renegotiate them. In addition, you can’t get your money immediately in case of an emergency. Also, if the company that handles your structured payments goes out of business, your money may be gone.
When Should You Opt for a Structured Settlement?
You are generally best suited to receive a structured settlement if:
- Your case involves a large settlement that cannot be paid in a single payout.
- You got injured on the job and are now temporarily or permanently disabled.
- You suffered a personal injury that left you with serious damages and require regular medical checkups.
- Your spouse or family member died in wrongful death or due to medical malpractice. The payments received in a structured payment will replace your loved one’s income and help you meet your everyday expenses.
St. Louis Work Injury Lawyers
Coming up with a fair structured settlement agreement can be difficult without an attorney by your side. If you’re planning to file a workers’ comp claim and would like to receive a structured settlement, our attorneys here at the Law Office of James M. Hoffmann can evaluate your case for free and help you determine what your next steps should be. Give us a call 24/7.