Structured Settlements

In a big recovery from a wrongful death or injury matter, structured settlements can make a huge difference for the client.

Structured settlements are an important thing for a personal injury lawyer to know about and to explain to a client in any significant case. Structured settlements are an option under a special provision of the federal tax law that allows money received from personal injury settlement to get special tax treatment. Most personal injury settlements or verdicts are not taxable when received by the client. However, once the client invests the money, then any interest or return on the proceeds is taxed. What structured settlement does is allow the client, the personal injury victim, to put money with an insurance company to grow tax free and to be paid back to the client tax free in the future. This preferential treatment for structured settlements is only available if the client chooses to put the money aside right away at the time of the settlement. If the client receives the money directly himself first, he can no longer do a structured settlement. Thus, it is extremely important that a lawyer handling a serious personal injury matter discuss structured settlement with the client at the time of any settlement.

Structured settlements can be done with amounts as little as $4,000.00. Typically, clients choose not to do structured settlements unless the settlement proceeds to them are in the hundreds of thousands. A special case arises where there is a child or an incompetent person who gets the injury money. Then, a structure may make sense and should be discussed with the parents or guardian, even when lower dollar figures are involved. A good personal injury lawyer should document that he has talked to the client about structured settlement any time a child or an incompetent person is involved or on any significant settlement of a personal injury or wrongful death case.

Unless lawyers routinely handle files resulting in recoveries of hundreds of thousands or millions of dollars, they may not be as familiar as they should be with structured settlements. Our firm has a lot of history with dealing with such big cases. Because we have a familiarity with structured settlements, we are in a better position to help the client make a good decision for themselves in this regard. Structured settlements are never forced on the personal injury client. Rather, the process is one of educating the injured client as to investment options that may be more beneficial to the client long after the personal injury lawyer’s involvement is over. One thing we do is put the client who was hurt in touch with a company which brokers these structured settlement deals. The key is that we only recommend using a structured settlement company which works primarily for the plaintiff or the injured person’s side of personal injury cases. Other firms specialize in working on behalf of the at fault defendants in these big cases. With a plaintiff’s side broker, you know that their loyalty is to the injured person and his family and not to the other side.

There are many complicated issues which requires that you have someone you can trust on your side in doing a structured settlement deal. You need to make sure that the insurance company who is selling the structure is a top rated, secure company. You need to make sure that the rate of interest on the contract is the best possible rate. In big settlements, we make sure that the hurt client is advised about these options, so that he can make a sound judgment for himself. Only after listening in depth to the clients and evaluating their financial and family situation, as well as their health, can a plaintiff’s side structured settlement broker help the injured clients to make good decisions.