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What are Structured Settlements?

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  • Written By: D Frank
  • Edited By: L. S. Wynn
  • Last Modified Date: 25 July 2018
  • Copyright Protected:
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    Conjecture Corporation
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As we know, America has become a suit-happy society. Over 90 percent of the lawsuits filed every year eventually end in an out-of-court settlement reached between the parties. In the area of personal injury law, where plaintiffs receive monetary awards to compensate them for the injuries they have suffered, structured settlements have become quite popular. Essentially, structured settlements refer to a deferred payment agreement made between the plaintiff and defendant in a personal injury lawsuit where the plaintiff will receive the monetary payout over the course of a number of years.

In smaller cases with minimal payouts, structured settlements will rarely be used. Also, when cases are not settled and the lawsuit proceeds to trial, structured settlements rarely come into play as the jury will make a specific award for damages to the plaintiff if the plaintiff is successful with its case. Structured settlements only come into play when the plaintiff and defendant are talking about a settlement value in terms of millions of dollars and more. For negotiating purposes, structured settlements are something both sides often must take a look at while working towards a settlement. A plaintiff may often negotiate a settlement composed of a direct payment as well as part structured settlement.

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Lottery winners in various states also receive structured payments of their winnings over the course of a specified time. This is often accomplished through the purchase of an annuity that guarantees payment of an agreed monthly amount of money over a specified period of time.

Personal injury plaintiffs also have the option of turning their structured settlements into instant cash. Insurance companies and other investors offer to pay present day value money (lump sums) in exchange for the funds that are received by way of the structured settlement agreement. No two agreements may work the same for different personal injury clients. It is the lawyer's job to work for the best possible settlement for his client. If a client takes a complete or partial structured settlement, he or she can always sell it to an investor for a present day lump-sum payment.

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