Structured Settlements Help - Everything You Need to Know

This site was designed to educate and answer any questions visitors might have had regarding structured settlements.
Information is from the site's archived content CIRCA 2005 as well as from other outside sources.

Structured Settlements – What are they?

It is a financial award given to someone that sustained injuries in an accident typically paid by an insurance company. Rather than one large payment and structured settlement is an annuity that pays the recipient out over time. The purpose is to provide ongoing income for someone that may not be able to work so that they can meet their financial obligations over the many years. Payments are often paid monthly or quarterly and can last up to twenty, thirty years or more depending on the case and situation.

Additional Information

A structured settlement can offer several advantages including the security of long-term income being guaranteed. If the injured party is unable to work due to their injuries this provides them income to pay their bills and get any need medical care. It also serves as a way for one to manage their settlement and ensure they will have money to meet their ongoing needs several years in the future. It also enables the injured party to focus on their recover rather than money management.

There are statistics that show that up to 30% of those that receive a lump-sum as their settlement spend it within the first few months and upwards of 80% have spend the money within five years.

If one chooses a lump sum payout from the onset the money needs to be invested and administered. Unless the injured party or their family has money management experience they will need to hire a quality financial advisor to invest the award to ensure it will last for many years to come.

The income from a structured settlement is tax free, both at the Federal and state levels. Because the money is handed out in smaller increments there is less need to for a financial advisor as the payments are set up to meet your monthly needs.

Structured settlements are often ideal under the following circumstances:

Workers compensation cases where the injured party is unable to work for a protracted length of time. A structure will allow steady income to insure that the victim and their family will continue to have steady income.
Disabilities of a temporary or permanent nature that require extensive health care or recovery time.
Guardianship cases where the injury results in death of someone with minor children. A structured settlement can insure that funds are available for the surviving family members.

There are many things to consider if you are in a position to receive a large amount of compensation for injury or accident. One of the options may involve payments over time. Before you act, you should learn as much as you can about structures in order to determine if such an agreement is right for you. As always, should you find yourself in such a situation, you should consult with a financial advisor and/or a competent attorney. The last thing you want to do is deal with a crisis without adequate help.

If you have been thrust into learning about structured settlements, then most likely some catastrophic event has occurred to you or more likely a loved one. When such an event occurs under regular circumstances it is stressful enough, but when it occurs in the middle of a pandemic and where you live is in lockdown the stress is worse. At least I felt that way. As the art director for my agency, I had just locked down the East Coast team for our rollout of a new product by convincing a well know RI photographer, Rue Sakayama, to join us. She handles architectural and product shoots for us so is perfect for this project. But now we'll have to figure out how to work remotely. I'm really more comfortable working in person so this will be tough, but we'll approach it as a challenge. I'm sure this pandemic is going to be the root of many structured settlements arising from disasters caused by the pandemic.

Thank goodness my sister lived close enough to our parents so she was able to handle the immediate medical situation and later deal with the doctors, take over the handling our parents bills etc. I was tasked to look into a lawyer and dealing with the insurance companies, once my sister could send me the insurance information. It turned out that a large commercial truck had run a red light and smashed into my parents' car. My mother received numerous injuries which she mostly recovered from, but my father's spinal cord injury resulted in quadriplegia.

The lawyer representing my parents, my parents' car insurance company and the commercial truck company's insurance company worked out over numerous months during the ongoing pandemic, what I thought was a very complicated settlement for my father and a more straight forward one for my mother. Thank goodness we didn't have to go to court which would have just extended this whole process even longer. Finally, the settlements stipulated that there was an immediate lump sum of $XXXX,XXX to settle my parents existing debts, pay their lawyer, renovate the house to accommodate my father's medical needs including 24 hour nursing care, and meet other expenses which my sister and I had been handling since my father obviously wasn't and would never ever be able to work again.

I think that because my father was a quadriplegic and his life expectancy was now shorten his structured settlement agreement was quite different from my mother's settlement agreement. The insurer purchased for my father a series of personal injury lump sums that are spaced out every 3 years and will be payable if he is alive on the agreed payment dates. My mother's settlement agreement that was reached between the parties included a personal injury annuity for her from a life insurance company that started at $XX,XXX per year, with payments paid to her monthly, indexed to the consumer price index (CPI), payable for as long as she lives and guaranteed for the first 20 years. The settlements were complicated and had more in them. I am just giving a brief summary. I think having a lawyer who specializes in personal injury settlements was to my parents' benefit. I don't know if they would have gotten the same settlement if only the insurance companies had negotiated between themselves.

What you really want, is never to have to deal with such a situation that results in a personal injury settlement. But if you do, educate yourself and get a good lawyer.

Settlement Definitions

It will be helpful while navigating this website and learning more about settlements to know the most important terminology used in the industry. Some of the more important definitions are below. If this site does not answer you questions or if you want a definition explained to you please email us at
[email protected] We are happy to answer your questions and put you on the right path for whatever your particular issue is.

Factoring Company – This is a company that purchases future payment or annuity streams and provides the seller lump sum cash.

Structured Settlement – Financial settlement for someone injured in an accident – rather than being paid out in cash they receive a settlement that is structured to make recurring payments over many years to help the recipient meet their long term financial obligations.

Annuity – A settlement is set up by purchasing an annuity that will then make payments to the recipient over the term of the agreement. The annuity is purchased by the insurance company that presented the offer of a settlement is managed by a second (non-affiliated) insurance company. Payments are made at regular intervals typical monthly, quarterly or annual as stipulated in the original terms of the agreement.

Primary Market – The primary market are companies that help injured parties to set up a structure based on the offer of the settlement by the insurance company. The goal is to take the full amount and space out payments in such a way to meet monthly financial obligations over a long period of time (ten, twenty years or more).

Secondary Market – These are factoring companies (see above) that help those that have a settlement and want to cash in their payments for cash. They are the buyers.

Why Settlement Recipients Sell?

The most common reasons people transfer their future payments for cash include:

1. Their life or financial circumstances have changed
2. To pay mounting bills
3. Other reasons include: divorce, to pay for college, or a down payment on a house

FAQ’s

This website will set up a Frequently Asked Questions section but some of the more important questions are below. If you have a question that is not answered here or on the site please submit your information on our form above or the you can email us as well and we will answer you question promptly.

Can I sell my settlement – The short answer is yes. Based on the definitions above there is an entire industry that was set up to meet the needs of those that are receiving payments from an annuity and want/need a larger sum of cash. You can cash out your payments.

Do I have to sell all my payments: No – the good news is you have flexibility to meet your needs based on your wants and financial situation. You have the option to sell all your payments at one time or sell only some payments. If you sell on some payments you can get a lump sum today and keep some of your future payments intact. The amount of payments you sell is totally up to you but should be considered carefully so you cash in the right amount.

Can I do more than one cash out transaction: Yes, it is certainly possible and done fairly routinely. Although this is often done by those that mistakenly do one cash out transaction and sell too few payments. So it is important to consider the amount of cash you need today and any future need you might have so you can try to do only one transaction. But the option to do a second or third transaction is possible.

Benefits and Drawbacks of Annuities

As with any financial arrangement, there are benefits and drawbacks to structured settlements. Anyone with a serious injury who requires long-term medical care who is considering such a transaction should become familiar with the advantages and disadvantages of a structured settlement before entering into any sort of agreement.

Advantages

The advantages of a structured settlement over a lump sum payout are numerous:

They are Tax Free - As of 1982, structured settlements are tax free, both at the local and Federal level. Lump sum payments can be tax free, but the investment income generated by them is not. If you have concerns about taxes or having to keep up with tax matters caused by interest or investment income, then a structured settlement might be best for you.

They provide additional security - Many people who suddenly obtain large amounts of money, such as those obtained in a lump-sum payment as a result of a personal injury or accident, may suddenly find the world knocking at their door, as long-lost poor relatives, salesmen and con men are always interested in people who are suddenly flush with cash. This is not an issue with structured settlements, as the cash flow is steady but smaller. In addition, there are fewer worries about investing money, both in terms of where to invest it and in terms of whom to trust with the investments. The beneficiary of an annuity-based payment need not worry if a downturn in the stock market will affect their future health care needs, or worry if the investment advisor they hired is scheming to take all of their money.

They can save money - Settlements of this type are often arranged out of court, saving both parties the time and expense of accident litigation, which can often drag on for years with lawyers taking a large portion of any lump sum settlement. The costs of not going to court can be substantial, which leaves more cash available for the long-term care of the injured party.

They are flexible- Depending on the needs of the injured party, the payment period can be for five years, ten years, twenty years, or even a lifetime. If there is a recurring expense every two years, the payments can be structured to meet that every-other-year expense.

Disadvantages

The advantages of a structured settlement probably outweigh the disadvantages, but anyone considering such a settlement should also be aware of the downsides associated with them:

Structured Settlements cannot be changed - Generally, once you agree to accept an annuity, you cannot trade the annuity back for a lump sum payment. Structured settlements have special tax considerations. Once such an agreement is reached, you are stuck with it, for better or worse.

Structured Settlements do not pay interest - The interest is built in to the payments; that’s how an annuity works. On the other hand, the payments are tax free, and you can certainly invest any unspent portion of your payments and collect interest on that sum.

Long term payments may not be used as collateral for a loan - The laws that establish how these arrangements work are designed to protect the injured party from abuse. Placing the payments as collateral would place the financial agreement at risk, and that is not something for which they were designed. You may, however, declare your payments as income, and use that to apply for a loan.

This type of payment solution is not for everyone. If you want to pay cash for a big house using your settlement money, you may wish to take a lump sum payment instead. Once you agree to accept payments over time, you are obligated to continue. On the other hand, the amount of money you receive may be greater than if you accepted a lump sum payment, particularly if your payments are for life and you have the good fortune to live a long time.

You should see a qualified attorney if you are injured and are seeking compensation.

Selling your structured settlement

At some time during the period you are being paid for your structured settlement, you may decide that you wish to sell it, or you may be approached by a company that is offering to buy your settlement. Can you sell your structured settlement? How much will you receive?

The value of your settlement was determined by a number of factors - the amount of time you are to be paid, the severity of your situation, and the expected rate of inflation over the months or years you will be paid. The party that is paying you is purchasing an annuity, and the amount that they pay up to establish that annuity is but a fraction of the amount you will receive over time. That money is invested, and the interest it accrues over the years allow it to grow large enough that it might have a series of monthly or annual payments withdrawn.

Once you agree to accept a structured settlement, you cannot exchange it for a lump sum payment, nor may you use your settlement as collateral for a loan. What if you want to buy a home and pay cash, or you have some other unexpected large expense?

Under certain circumstances, you may be able to sell your structured settlement. There are investors who are interested in purchasing structured settlements, lottery winnings, and other annuities. Perhaps you have been contacted by one of these agencies.
The laws regarding the sale of structured settlements vary from state to state, and there are Federal laws that affect their sale, as well. You will probably have to go to court to arrange the sale, and some insurance companies, who handle the annuities that fund structured settlements, will not assign them to a third party.

Even if you do decide that you would like to sell your structured settlement, be aware that the amount that you are likely to be offered for your payments will seem quite small. If you take the amount of money you receive annually for your settlement and multiply it times the length of time you will be paid, you will come up with a total value for your settlement. Keep in mind, however, that your payments have been funded through the creation of an annuity that earns interest and grows over time. The value of your settlement in present-day dollars may be half of the total value or even less, depending on how the payments were calculated and structured.

Any party that offers to buy your annuity is interested in doing so for investment purposes. They wish to make money on the transaction, and for them, that profit will be spread over the long time that it takes to receive all of the payments that constitute the settlement. Once you combine the factors of time, interest, inflation, and the buying party’s profit, you will find that the offer made to you will seem quite small.

Still, you might be interested in accepting it, as the lump sum offered may allow you to take care of your present needs more readily than continuing to accept payments over time. Be aware that there may be tax considerations in selling your payments, and due to state laws and the policies of the insurance company that handles your annuity, it may not even be possible for you to sell your structured settlement.

If you decide to sell, discuss it with your attorney. You will need to go to court to facilitate the sale. You should also shop around, as different companies may offer widely different amounts for your settlement. Beware of scams; one of the reasons you’ll want an attorney is to make certain that you actually get paid for the transaction.
You might also wish to contact the National Structured Settlements Trade Association. The NSSTA is a trade association that deals specifically with these sorts of arrangements. They may be able to offer additional information regarding the specifics of selling.

About Structured Settlements

The Periodic Payment Settlement Act of 1982, passed by Congress, amended the Federal tax code to recognize and encourage the use of structured settlements as a payment solution in personal injury cases.
Prior to this, damages paid due to lawsuits stemming from accident, injury, or workmen’s compensation cases were generally paid as a lump sum; the injured party received all of their payment at one time. This required that the injured party not only adjust to living with a disability, but also to adjust to having a large sum of money.

Even if you do not have a crippling injury, it can be a burden to suddenly be presented with a large sum of cash. The money must be invested, and invested wisely. If you cannot or will not administer the sum yourself, then you must find someone to do it for you. A friend? A relative? A stranger? Can you find someone honest to make this money work for you? Often, these situations did not work out well, and many victims of personal injury or accident found themselves penniless after just a few years, when their settlement was intended to support them for life.
The structured settlement came about as a result of too many people being awarded large sums, only to find themselves poor and unable to take care of themselves as a result of careless spending, unscrupulous investors or greedy relatives.

In a case involving physical injury and a suit involving a responsible party, an annuity system may be negotiated as an alternative to a lump sum payout for taking care of the victim’s long-term needs. The responsible parties will meet to discuss what the victim needs in terms of care or assistance, and to determine the length of time, anywhere from a year or more to life, that the victim will need financial assistance. Once a present-day value is determined, a or a representative of the insurance company that will facilitate the payments will perform the necessary calculations to determine the long-term value of the payments. The party that pays the damages will then purchase an annuity to fund the agreement. From this annuity, the injured party will receive their stream of payments.

Some types of injuries are well-suited to long term payment plans; others work better with a lump sum payout. Annuity plans are ideal for situations where the injured party will be incapacitated for several years or perhaps their lifetime, or when they will require long-term medical care. Such a financial arrangement might have worked well for Terry Schiavo. Mrs. Schiavo, a resident of Florida, was in a hospice and unable to care for herself for fifteen years. She received a lump sum payment for the negligence that led to her chronic vegetative state, but a structured settlement might have provided a better solution. Structured settlements are particularly useful in cases where the guardians or parents of minor children are injured or killed, leaving the children without adequate financial support or funds for their education.

More Background on StructuredSettlementHelp.com

StructuredSettlementHelp.com is a specialized website focused on educating the public about structured settlements-a unique financial arrangement often used in personal injury, workers’ compensation, and similar cases. While not as prominent as some major industry players, the site has carved out a niche as an informational hub for individuals navigating the complexities of structured settlements. This article provides a comprehensive look at StructuredSettlementHelp.com, exploring its background, audience, reputation, and significance within the broader landscape of financial education and settlement resources.

History and Background

Structured settlements were popularized in the United States following the passage of the Periodic Payment Settlement Act of 1982, which encouraged the use of structured settlements in personal injury cases by granting favorable tax treatment to recipients. This legal framework was designed to protect individuals from quickly depleting large lump-sum awards and to ensure long-term financial security for those unable to work due to injury or disability.

In the decades since, a robust ecosystem has emerged, including primary market providers, secondary market factoring companies, and a range of informational resources. StructuredSettlementHelp.com was established to serve as one such resource, offering guidance and clarity to those unfamiliar with the intricacies of structured settlements.

Purpose and Content

StructuredSettlementHelp.com is primarily an educational platform. Its main objectives include:

Explaining the fundamentals of structured settlements, including how they work, who can benefit, and the typical scenarios in which they are used.
Providing information about the process of selling structured settlement payments, including the legal and financial considerations involved.
Offering resources for individuals considering whether to accept a structured settlement or a lump-sum payout.
Answering frequently asked questions and clarifying industry terminology.

The site targets individuals who have received or are considering structured settlements, as well as their families and legal or financial advisors.

Audience and User Experience

The primary audience for StructuredSettlementHelp.com consists of:

Personal injury victims and their families
Individuals involved in workers’ compensation cases
Guardians or representatives of minors or incapacitated adults
Legal professionals seeking educational resources for clients
Anyone considering selling their structured settlement payments

The site is designed to be accessible to non-experts, with clear explanations and practical advice. It aims to empower users to make informed decisions about their financial futures, particularly in the aftermath of traumatic or life-altering events.

Reputation and Reviews

While StructuredSettlementHelp.com does not have the widespread recognition of larger financial advice platforms, it is generally viewed as a reliable and straightforward resource within its niche. Reviews and mentions on third-party sites and forums often highlight the following strengths:

Clarity of Information: Users appreciate the site’s straightforward explanations of complex financial concepts, making it easier for laypeople to understand their options.
Focus on Education: The site is seen as more educational than promotional, distinguishing it from many industry websites that prioritize lead generation or direct sales.
Comprehensive Coverage: StructuredSettlementHelp.com covers a range of topics, from the basics of structured settlements to the legal process of selling payments and the pros and cons of different approaches.

However, some users note that the site’s design and depth of content may not match those of larger, more commercial platforms. It is best suited for individuals seeking foundational knowledge rather than in-depth financial planning or legal advice.

Press and Media Coverage

StructuredSettlementHelp.com has not been the subject of significant mainstream media coverage. It is occasionally referenced in industry blogs, legal forums, and financial advice websites as a useful resource for those seeking to understand structured settlements. Its low profile reflects its focus on education rather than commercial activity or aggressive marketing.

Known For: Educational Focus

The site is best known for its commitment to providing unbiased, educational content. Unlike many structured settlement websites that function primarily as lead generators for factoring companies, StructuredSettlementHelp.com positions itself as a neutral source of information. This approach is particularly valuable in an industry often criticized for aggressive sales tactics and a lack of transparency.

Cultural and Social Significance

Structured settlements play a critical role in the lives of individuals who have experienced serious injury, disability, or loss. The financial decisions made in the aftermath of such events can have lifelong consequences. By demystifying the structured settlement process and highlighting both benefits and risks, StructuredSettlementHelp.com contributes to greater financial literacy and consumer protection within a vulnerable population.

The site’s educational mission aligns with broader trends in financial empowerment, particularly for those facing sudden, life-changing circumstances. It helps users understand:

The difference between lump-sum and structured settlements
The legal and tax implications of each option
The process and consequences of selling future payments for cash

Details, Insights, and Examples

Key Topics Covered:

Structured Settlement Basics: The site explains that structured settlements are typically awarded in cases of personal injury or workers’ compensation, providing recipients with a stream of tax-free payments over time instead of a single lump sum.
Primary vs. Secondary Market: StructuredSettlementHelp.com clarifies the distinction between the primary market (setting up new settlements) and the secondary market (selling future payments to factoring companies).
Selling Payments: The site outlines the legal requirements for selling structured settlement payments, including the need for court approval and the potential impact on long-term financial security.
Pros and Cons: Users are guided through the advantages (such as tax benefits and financial stability) and disadvantages (such as inflexibility and the potential for undervaluation when selling payments) of structured settlements.

Illustrative Example:

A typical scenario discussed on the site might involve an accident victim who receives a structured settlement after a lawsuit. The settlement provides monthly payments to cover living and medical expenses. Years later, the recipient faces unexpected expenses, such as medical bills or educational costs, and considers selling a portion of future payments for a lump sum. StructuredSettlementHelp.com explains the legal process, potential pitfalls, and strategies for maximizing value in such transactions.

Industry Context and Comparisons

StructuredSettlementHelp.com operates in a competitive landscape that includes:

Factoring Companies: These firms purchase structured settlement payments at a discount, offering lump sums to recipients. Many have aggressive marketing and lead-generation tactics, which sometimes draw regulatory scrutiny.
Major Information Hubs: Larger sites like Nolo, FindLaw, and the National Structured Settlements Trade Association (NSSTA) offer broader legal and financial information but may lack the focused, user-friendly approach of StructuredSettlementHelp.com.
Government and Nonprofit Resources: Some government agencies and nonprofits provide educational materials on structured settlements, but these are often less accessible or comprehensive for the average consumer.

StructuredSettlementHelp.com distinguishes itself by focusing on clear, actionable information rather than sales or referrals.

Legal and Regulatory Environment

The sale of structured settlement payments is governed by both federal and state laws. Key requirements include:

Court Approval: Most states require a judge to approve the sale of structured settlement payments, ensuring that the transaction is in the seller’s best interest.
Disclosure Requirements: Factoring companies must provide clear disclosures about the terms and consequences of selling payments.
Consumer Protections: Laws are designed to protect vulnerable individuals from predatory practices, but recipients must still exercise caution and seek independent legal advice.

StructuredSettlementHelp.com educates users about these legal safeguards and encourages them to consult qualified professionals before making decisions.

Community and Social Impact

By providing accessible information, StructuredSettlementHelp.com helps individuals avoid common pitfalls, such as:

Selling too many future payments and jeopardizing long-term security
Falling victim to scams or predatory offers
Failing to understand the tax and legal implications of settlement decisions

The site’s emphasis on education and caution reflects a broader commitment to consumer protection in an industry that has historically faced criticism for exploitative practices.

StructuredSettlementHelp.com occupies a valuable niche in the structured settlement industry as an educational resource for individuals facing complex financial decisions after injury or loss. While it may not have the size or media presence of larger platforms, its focus on clarity, transparency, and user empowerment makes it a trusted source for foundational knowledge about structured settlements and the options available to recipients.

The site’s role is especially important given the high stakes involved-structured settlements often represent the primary source of financial security for individuals who are unable to work due to injury or disability. By demystifying the process and highlighting both opportunities and risks, StructuredSettlementHelp.com contributes to better outcomes for its users and supports broader efforts to promote financial literacy and consumer protection.

StructuredSettlementHelp.com