Advantages purchasing Structured Settlement
If you’re an individual harm victim, here are 3 honorable argues why you need to purchase structured settlement besides obtaining a lump sum settlement.
Why you need to purchase Structured Settlement ?
Specifically, once you buy structured annuities, you help yourself to appreciable tax advantages, protect yourself of getting finances spread out, and, if you’re handicapped, the periodic payments, mixed with other estate planning options, can increase your likelihood of Medicaid eligibility.
Tax avoidance with Structured Settlement
Many companies that sell these types of annuities tout the advantages of tax avoidance. While you should not base your decision to buy structured settlements solely on tax consequences, it is certainly a consideration. Specifically, personal injury payments are exempt from federal income tax under federal law. However, settlements for lost wages are subject to taxation. When you settle your claim, you may avail yourself of other tax advantages under the Federal Structured Settlement Protection Act. With appropriate tax planning, such a settlement may provide favorable tax treatment, and may in some cases be tax exempt.
Companies that sell annuities correctly advise that they are intended to compensate the plaintiff for injuries and provide for future lost wages and medical care. But, oftentimes, structuring a settlement can protect minors, incompetent persons and financially unsophisticated plaintiffs.
Some people aren’t good at handling their finances. Within a sort period of time, the plaintiff is penniless. Encouraging the plaintiff to purchase an annuity settlement keeps the money from being squandered, and more importantly, gives the plaintiff an “excuse” to refuse unscrupulous friends and relatives’ requests for money.
The legal representatives or guardians of minors should consider buying annuities in lieu of cash. Many of the same benefits to unsophisticated plaintiffs also apply to minors as well. Sometimes, the parents of minor personal injury plaintiffs are unsophisticated and could waste the funds instead of saving them for the child’s benefit. Instead, a guardian who decides to purchase structured annuities, can set up such annuities so that the child receives periodic lump sum payments for college expenses, the purchase of a house and possibly a business.
Medical care and Structured Settlement
Most personal injury plaintiffs look to buy structured settlement to provide for future medical care. Structured settlement calculators can be used to predict cash needs to prepare for future medical needs. Not with standing the benefits of periodic payments, in some cases, severely injured payment would obtain better benefits from a special needs trust. This is because of the possibility that the plaintiff could be eligible for Medicaid because of the severity of his or her injuries. A special needs trust can be structured so that the plaintiff can receive the benefits of a structured settlement without being disqualified from receiving Medicaid. Consult with an estate planning attorney or disability needs planner for more information on this particular situation.
As a plaintiff, now that you know a bit more about the benefits obtained when you purchase settlement payments, you can decide what is right for you. Specifically, you need to consider the potential tax advantages when you buy structured settlements. Many companies that sell structured annuities will advise that their annuities will protect the plaintiffs against waste, fraud and mismanagement. Companies can use structured settlement calculators and actuaries to develop a plan to meet the needs of a minor child. Finally, although the benefits of buying settlement annuities are plentiful, there are times where special needs trust might be a better alternative to a plan to purchase structured settlement payments. In the end, you need to consult with your attorney, tax advisor and financial planners to determine whether the decision to purchase structured settlement is one that you should consider.
