Problems Associated With Structured Settlements

Considering all the guarantees that come with a structured settlement, it seems odd that some people would feel compelled to read about the problems associated with such settlements. After all, any such settlement can serve as a tax-free source of income for someone with a disability. Moreover, that source has been preserved for the lifetime of the person that has agreed to receive the structured payments, the ones on which the two parties have settled.

Perhaps some people objected to one or more of the settlement’s other features. As structured, it remains non-assignable, non-commutable and non-transferable. Today, consumers seem to shy away from using an income source that has such features. Today, consumers have welcomed the appearance of new types of settlements.

The Market Indexed Settlement

The holder of one of the market indexed settlements does not have to feel satisfied with a fixed level of income. The income given to the holder of this settlement can increase. It can increase, because it is based on the level of the market’s performance. It cannot keep increasing indefinitely. It has been capped at a ceiling of 5%.

The Convertible Lump Sum

This plan allows an accident victim to get a lump sum payment, instead of a series of payments. The future date for delivery of that lump sum gets specified in a written agreement. After having obtained that large block of money, the person that has received it can re-invest it. Ideally, it will be re-invested in a plan with a higher interest rate.

Do most of the people that receive that lump sum actually re-invest it? At this time, that answer does not appear to be available; maybe no research has been directed at obtaining the answer. Yet the ads that encourage consumers to go after a convertible lump sum seldom focus on the possibility of re-investing whatever money might be obtained. Perhaps the new types of settlements reflect the desires of a public that would like to have it both ways. No one objected to the fact that the structured settlement could serve as a tax-free source of income. But it looks like some consumers got a bit impatient.

Still, what explains the apparent lack of focus on what can be done with the money that has been made available? Does that reflect consumer’s reluctance to get taxed for money that they have received? Maybe it serves as evidence of the fact that consumers prefer to spend their money.

The role of the lawyer remains unchanged

Without a personal injury lawyer’s help in Edmonton, the victim of an accident will have trouble negotiating with an insurance company. Yet only someone that has become a skilled negotiator can work to get the largest possible settlement. Moreover, the new types of settlements are not available to everyone, just to those that have agreed to get regular payments, those which have come from an established compensation.