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Legal Blog

What is a Structured Settlement?

The vast majority of personal injury cases are settled outside of court through negotiations with insurance companies or opposing parties. Settlements are agreements whereby the injured party releases their injury claim in exchange for monetary payments (a settlement) from the defendant or insurance company. Settlements can either be in the form of a lump-sum payment or structured payments over a fixed period of time. Structured settlements are an arrangement in which the insurance company or defendant agrees to make periodic payments of damages to the injured party for a specified period of time or over their lifetime.

Structured settlements can include both an up-front cash payment to cover more immediate needs and future periodic payments over an extended period of time. Typically, a structured settlement will be funded through a financial investment tool known as an annuity, which will provide periodic payments to the injured party.

History of Structured Settlements

Structured settlements are governed by federal and state laws. In an attempt to encourage structured settlements and clarify existing tax laws, Congress passed the Periodic Payment Settlement Act in 1983. Over the past 25 years, structured settlements have become increasingly popular and now make up a $5 billion industry.

At the time Congress passed the Periodic Payment Settlement Act, there was a growing concern about personal injury plaintiffs and their families spending the entirety of their lump-sum cash settlements within just a few years. The federal government saw structured settlements as an effective means of providing economic stability for accident victims in personal injury cases.

Under Texas law, the Structured Settlement Protection Act is intended to provide safeguard measures to protect parties who have entered into structured settlements from transferring their rights to future periodic payments for an inadequate lump-sum payment.

Is a Structured Settlement Right for You?

Determining whether a structured settlement is the best option for you will depend on a variety of factors including, but not limited to:

  • Tax implications
  • Life expectancy
  • Your individual needs and expected expenditures (i.e. college tuition)
  • Money management skills
  • Other financial resources available
  • Specific terms of the annuity policy

There are both advantages and disadvantages to structured settlements. Before accepting any settlement offer or agreement, you should consult with an experienced personal injury attorney. The talented personal injury attorneys at The Krist Law Firm, P.C. can help you understand your rights, weight your legal options, and negotiate with the responsible parties and/or insurance companies on your behalf to obtain the compensation you deserve.

The Krist Law Firm, P.C. has over four decades of experience helping accident victims secure the maximum compensation possible. In the past, we have obtained favorable settlements for our clients without having to go to trial. We have the resources, skills, and knowledge necessary to build a strong case in support of your claim. Let us take on the burden of negotiating with insurance companies or opposing parties while you focus on recovery.

We understand the financial burdens you may be facing when you’ve experienced a debilitating injury, which is why we only get paid if we obtain compensation for you. Find out how Houston personal injury lawyers at The Krist Law Firm, P.C. can help you with your case by calling (281) 283-8500 to schedule your free consultation today.