Structured Settlement Payment - Get A Lump Sum Now Or Many Payments Later?
Doug Smith

Defined Tag: Structured Settlement Payment.

Large cash structured settlement payment awards have become a well known aspect of the U.S. court system. You may know the recipient of a giant settled award of a quarter million dollars or more. These are huge injury claims cases that get awarded to the injured parties.

When contemplating the receipt of settlement income, it is a good idea to educate yourself on how the process works. Retain an attorney before accepting annuity payments. This helps you avoid future problems when considering fast cash settlements.

The first thing you have to determine before accepting a large monetary court award is whether you are better off taking a large lump sum, or considering alternatives to a large cash payout.

There is no easy answer. In some situations a client may not be proficient in money management. A large payout can attract "vultures" who want to take advantage of the uninformed recipient.

Congress passed legislation to protect the financial concerns of people receiving large cash awards and their caretakers. Congress added a federal tax code that provides a large monetary payment alternative. The alternative is called a structured settlement. In a structured settlement payment, a person has a better way to manage his future financial dealings. The large cash award is set up as an annuity which pays the recipient fixed payments over many years, possibly over his lifetime.

It is wise to hire a lawyer experienced in these payout plans. People eligible for large money gains can be targeted by sales pitches of getting cash fast or lots of cash now.

"Selling out" for fast cash may not be the best alternative for many people's long term financial security. Some people get taken advantage of when they settle for a cash payout that is sometimes as low as one-third of the total future value of their annuity payments.

Aside from scam protection, a periodic payment, received annually for many years or decades, can be a wise choice for tax reasons too.

A good lawyer will help you avoid the promise of the quick cash companies that target your large payout settlement. Be sure your lawyer is knowledgeable enough to explain all the pros and cons of a fast cash payout.

When a settlement judgment is awarded, an annuity is purchased by the party at fault and held by an independent third party. This neutral third party then makes periodic payments to the injured individual.

Depending on the circumstances, a periodic payment plan can be completely free from taxation. For example, annuity payments from a personal injury accident will likely be paid tax-free. Annuity payments from a lottery win will be taxed as income.

Be positive that the company is reliable and has a proven record of positive returns on their investments. There are tax concerns and fees with these other investment options that you will need to deal with.

These periodic pay plans come with many important considerations. This is not intended to be legal advice of any kind. Rather, it provides simple guidelines to give you some ideas on how to proceed with such a payment plan or a large cash payout.

You should find the most experienced lawyer to represent you. Investigate the lawyer's legal status to make sure they have also had a record of satisfactory results when handling clients with structured settlement payment awards.

This article is Copyright 2009 by Doug Smith. All Rights Reserved Worldwide. Unauthorized Duplication Prohibited. For Entertainment Purposes Only. Not Intended As Financial Advice. Consult Your Own Financial Professional.