I think I understand what a structured settlement is (many payments over time rather than one big one) but are they a good idea? (Posted by Trip8 on The Forum.)
Yes, you are correct. With a structured settlement, the victorious plaintiff receives his or her money in a series of payments spread out over time rather than in one lump payment. However, whether it will be in your best interest to negotiate a structured settlement will depend on your particular financial and life situation.
On the plus side, structured settlements can be set up to minimize tax liability. Also, a defendant may be more willing to pay a larger amount to settle a case if he is allowed to pay over time, rather than in one lump payment. On the negative side, you can't get at your money and use it. Further, the annuities that are commonly used in long-term settlements may loose money or under-perform other types of investments you may have chosen. If I were you, I would talk about your unique situation with your attorney but also with a tax accountant before choosing a structured settlement.
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