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Individuals or organizations charged with personal injury, negligence, tort, or intentional misconduct might be given the opportunity to settle their dispute by way of structured settlements. A structured settlement is a process where the defendant is allowed to settle the case through a structured financial arrangement. In this type of settlement, the defendant is allowed to pay the claimant in an installment basis until the agreed total sum has been paid in full.

The Pros of Structured Settlements

One advantage of structured settlement is exemption or avoidance on tax obligations. This set up may significantly reduce the amount of tax that the plaintiff needs to pay. In some instances, it may altogether erase tax obligations; meaning that the plaintiff may be able to settle financial obligations tax-free.

On the part of the claimant, a structured settlement may provide enough time to obtain the funds needed for payment. There is no need to rush getting a large lump sum of money to settle the case. Depending on the agreement reached between the plaintiff and the defendant, the latter may opt to pay the installments annually, quarterly, or periodically.

This set up may also help protect the plaintiff from dissipation of funds. Especially for people who have a history of over spending and squandering their money on less important things, the scheduled payment structure of this type of settlement will do very well for them. It may help them save for their future needs. Likewise, it may provide them a continuous source of income overtime.

The Cons of Structured Settlements

A structured set up may not work well for people who need a lump sum for future plans and investments. For instance, if they plan to buy a home, they may not be able to readily get a lump sum for this venture from the settlement.