Although the plaintiff that has won a personal injury case normally receives a lump sum payment, not all payments have to be so large. In fact, the court does not insist on the delivery of a lump sum. Sometimes, the court agrees to arrange for creation of a structured settlement.
What is a structured settlement?
That is an agreement that has the support of both parties in a dispute. According to that agreement, the award offered the plaintiff is supposed to get delivered on a periodic and scheduled basis.
How does such an arrangement benefit the plaintiff?
The plaintiff enjoys a greater amount of certainty, with respect to the amount of money in his or her account during a defined period of time. Personal injury lawyer in Calgary know that the plaintiff does not owe any taxes on the money in the regular payments. The payments’ size does not encourage the making of an investment. The government can tax income that someone has enjoyed as the result of having made an investment.
None of the plaintiff’s money must be spent on the management of the acquired funds. The structured settlement ensures a careful management of the court-awarded funds. The money that goes into the plaintiff’s bank account stays protected from more than taxes. It is also protected from creditors. None of the plaintiff’s creditors can demand repayment of money that is owed to them. The terms of a structured arrangement call for an increase in the size of the plaintiff’s payments, as inflation increases the cost of goods and services.
What disadvantages manage to cancel-out some of the benefits associated with structured settlements?
Plaintiffs’ future needs cannot always be met properly by the payments called-for in the such settlements. In other words, the plaintiff is bound to discover, at some point in time, that he or she must seek an additional source of income.
Structured settlements lack the sort of flexibility that comes with the delivery of a lump sum payment. Plaintiffs have numerous different ways by which to use the money that has been received as a lump sum. They can invest the money or save it. Those options have been denied the person that has agreed to accept a structured settlement.
The recipient of a designated amount of money on a regular basis finds it difficult to prepare for emergencies. The court-ordered structure prevents the creation of any financial cushion. Consequently, the effects of a personal injury can get repeated, which necessitates the issuance of yet another award, in an effort to return the plaintiff to his or her original position. Of course, not every emergency result from the occurrence of a personal injury. Some emergencies create an immediate demand for available monetary funds.