What Does Structured Settlement Mean?

You have probably heard those words on TV late at night. Maybe the advertisement told you to sell your structured settlements. You have been wondering the meaning of these words ever since. Discover its meaning today.

What does structured settlement mean ?

It means that a financial compensation (settlement) will be paid over a defined period of time (structured) to a person.

A structured settlement is a financial tool used in the personal tort industry. It is an alternative to a lump sum settlement.

When there is an accident, the tortfeasor has to compensate the person injured. In the United States, this compensation is usually financial.

They have the choice: they can go to trial, settle with a lump-sum or with a structured settlement.

In cases involving minors, or persons with limited mental capacity, the lump-sum is usually the worst choice because they squander it within months.

With a structured settlement, there is no danger: the defendant and the plaintiff agree on monthly payments over a certain period. There can be too certain lump-sum now and then (marriage, college, a new car).

With this tool, plaintiffs and defenders avoid going to a costly trial and settle the case privately. They thus avoid the trauma of the trial. Therefore a structured settlement has a therapeutic effect.

Learn about structured settlements here.

 

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