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Is a structured settlement right for you?

Wrongful death cases often are settled out of court, particularly if the defendant realizes that a jury will be very sympathetic to a plaintiff. If your case is headed for settlement, you may be presented with an offer of a structured settlement.

With structured settlements, installment payments are staggered at regular intervals over a predetermined length of time. It could be for as few as five or 10 years or may last for the duration of the life of the plaintiff. These settlements are also useful in personal injury cases with catastrophic injuries that prevent or diminish a plaintiff from working again. If the deceased individual in a wrongful death lawsuit was the breadwinner of a family, a structured settlement can ensure that a family's economic needs will continue to be met, despite the death of their family member.

With structured settlements, insurance companies usually fund annuities that will generate continuous streams of income over the settlement's term. Below are some pros and cons of which plaintiffs should be aware.

Pros

-- The guarantee of payments for a set period of time can be attractive for families who might otherwise run out of money with a lump-sum settlement.

-- Annuities can be designed to meet plaintiffs' individual needs and contingencies.

-- Insurance laws on the state level guarantee insurers' obligations and offer safety nets if insurance companies become insolvent.

-- When defendants and plaintiffs are struggling to reach a workable compromise during negotiations, structured settlements can be proposed that meet both parties' specifications.

Cons

-- There can be adverse tax consequences stemming from structured settlements in wrongful death cases. It's always wise to retain a certified public accountant or other financial professional to advise on this matter before settling.

-- Future economic conditions, like recessions or inflation rates, could render the settlement payments insufficient.

-- Should a need arise to access a large amount of money quickly, it can be expensive to liquidate a structured settlement through a broker that "buys" them for a hefty chunk of the total.

Your attorney can provide advice and guidance during these negotiations so that you get the best deal possible.

Source: Findlaw, "Structured Settlements: Pros and Cons," accessed Sep. 30, 2016

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