3 Common Structured Settlement Examples

When you’re victorious in your lawsuit, you might think you’ll get the entire settlement at once.

In reality, the type of settlement you’re awarded will depend on your specific case. You might end up with a lump-sum settlement, or a structured settlement, or if you’re fortunate, you’ll have the ability to choose between them.

If you’re unfamiliar with structured settlements, they’re awarded as installments over a long period of time, rather than a lump-sum settlement which is paid once, in full. Today, we’re going to give you some common structured settlement examples so that you can get a better idea of who they’re for, why you might get one, and how they can actually benefit you more than a lump sum.

How Structured Settlements Work

What is a structured settlement?

Structured settlements are typically awarded as annuities, but there are a few different ways that you’ll see them paid out. Usually, there’s a set number of years that the settlement will be paid over, so if you’re awarded $250,000, you might get $25,000 over 10 years.

It’s a way to provide a more stable income for a longer period of time and it’s good for victims because the IRS and state governments are both barred from taxing structured settlements.

They aren’t always so simply administered, though. Here are a few examples of how they might work:

  • A large initial payment with subsequent smaller annual payments allows you to pay off bills (medical, and other debts) and then receive payments to replace lost income.
  • Payments could start lower and increase over time or vice versa.
  • Delayed payments that kick in at a certain time, for example, after retirement.

A defendant will, more often than not, purchase an annuity to make the payments a little bit easier on themselves.

Structured Settlement Examples

So, what types of lawsuits call for structured settlements? Here are a few common examples:

1. Personal Injury

Personal injury cases where the plaintiff cannot return to work in the foreseeable future because of a lasting or permanent injury usually end up in structured settlements. It usually makes more sense for the victim to take the settlement as a form of income, rather than a one-time payment.

2. Wrongful Death

In the case of wrongful death, where the victim’s family is left with a void where their income used to be, you’ll often see a structured settlement. Juveniles that are found incompetent but require financial assistance will usually get structured payments as well.

3. Workers’ Compensation

Some workers’ compensation settlements, especially ones that result in a plaintiff being unable to return to work, are paid as structured settlements. In 1997, the US tax code was amended to promote the use of structured settlements in these cases.

Making the Most of Your Settlement

If you’re ever in a situation where you’re being awarded a large settlement for your case, it’s worthwhile thinking about getting a structured settlement.

These are just a few structured settlement examples, but there are many other situations where it would apply (wrongful imprisonment, discrimination, vaccine injury, etc.), so educate yourself on the benefits and make the best decision for you and your family.

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