A structured settlement is a financial tool used in personal injury negotiations. These structured payments built to fit the immediate and long term needs of the injured party. The payments are funded through the purchase of a fixed annuity (either immediate or deferred) by the defendant, for the benefit of the injured party. The annuity is purchased through a highly rated life insurance company and all payments are completely exempt from income tax (if the claimant is physically injured, per 26 USC § 104 – (a) (1) & (2).
Structured Settlements may also benefit:
The greatest benefit to the injured party is protection. When properly designed, annuitants are assured that guaranteed tax-free payments will always be available to meet their financial demands. There is no risk that payment amounts will change or fall victim to the ebb and flow of the stock market. A structured settlement provides a claimant with financial security in a time of uncertainty. They are protected and governed by Federal legislation and IRS regulations. Confidence, peace of mind and guaranteed performance are all trademarks of the structured settlement, helping injured parties move forward with their lives.
It is typical for a claimant and the insurance carrier to disagree on the value of a claim. The main issue is often that the claim is being valued in terms of a one-time cash settlement. If a claimant shifts the focus to what he or she will need in future income, often an agreement can be reached which is beneficial to both parties. In short, this annuity often breaks deadlocks between the claimant and the insurance company. Also, it may encourage a settlement sooner than would be the case with a cash only settlement.
There are nearly limitless design options available to injured parties when utilizing structured settlements. Payments can be made on a monthly, quarterly, semi-annual or annual basis. Payments can be made for a defined period of time or a lifetime. Lump sum payments can also be made on specific future dates, to coincide with anticipated major expenses, such as; college expenses, medical expenses or prosthetic replacements.Typically an annuity design is comprised of multiple payment streams to meet all of the future needs of the injured party. Payments can commence immediately after settlement or be deferred to future identified dates.
If income needs are expected to grow, inflation hedges can be put in place through cost of living adjustments (COLAs) or step-up increases in the payment amount.
Any remaining guaranteed payments that are part of the annuity payment schedule will be made to an identified beneficiary, such as; a spouse, child, grandchild or nonprofit entity (i.e. a church). All payments are also made to the beneficiary in a guaranteed tax-free manner. This offers unprecedented estate protection and peace of mind for surviving family members.
Fixed annuities are among the most conservative financial investments. This makes them ideal investment vehicles for injured parties who cannot afford to speculate with their future.
Structured settlement annuities are backed by leading life insurance companies. Many of these life insurance companies have been in business for more than a hundred years; through recessions, depressions and world wars. These life insurance companies have maintained stability in various financial climates promoting the structured settlement as a safe and trusted option.
Utilizing direct deposit of funds for annuitants, there is not much to think about once the annuity is in place. Funds are deposited on the identified dates and can be used immediately by the claimant to meet the financial demands of daily life. At the end of the day, designing a well thought out structured settlement is always a smart idea as it eliminates the risk of financial mismanagement by the injured party or a third party investor.
Of course. However, none offer the guaranteed tax-free benefits associated with a structured settlement. A structured settlement is often used to address a catastrophic event in the life of an injured person.
Investing settlement dollars without instituting a structured settlement component requires consistent monitoring of investment performance. For many injured people, the position of hoping there are adequate resources available when they are needed does not make sense. By working with Garrison Settlements you can eliminate worry and move forward – stress free.
Possibly and possibly not. What is clear, is that because of the tax-free status of the payments, structured settlements often offer returns higher than those normally available in other low risk investments.
However, you may want to consult your financial adviser about responsible re-investing of your annuity payments through dollar cost averaging, or fixed income investing. To get a higher return you will have to accept higher risk and greater uncertainty.
There is never a fee from Garrison Settlements associated with structured settlement quoting, setup or management.
Structured settlements are guaranteed, tax-free, and designed to provide income as it is needed.
While this may be possible, most financial advisers do not have the experience in accident-related settlement planning and the laws and IRS codes that surround a structured settlement. If you have a financial adviser that you want involved, have them contact us. At Garrison Settlements we are here to protect the physically injured. Often we can assist your financial planner in creating the best plan for you utilizing a combination of structured settlement annuities and financial products.
There are no out of pocket expenses for utilizing a structured settlement consultant from Garrison Settlements. If your case is settled with a structured settlement, your consultant’s services are paid by the life insurance company that guarantees your future payments.
Great question and one we are humbled you are considering. We are guided by our faith, and as such, handle each claim with the personal attention we would our own finances. Garrison Settlements representatives are dedicated to assisting the physically injured. We have settled cases in all 50 States and understand every claim is unique, as are the individuals involved in the negotiation. Our goal is to eliminate stress and create financial solutions that allow everyone to move forward with their lives.
Should you still have questions about additional options, please call our Nationwide Settlement Planning Line at (844) 222-0020.