A structured settlement is a kind of settlement entered into by two parties. One party is in agreement to pay a certain sum which is owed to the other. The sum owed was incurred from the out of court arrangement or lawsuit. The disbursement of the total sum agreed is not given in full but in the form of installments. For that reason, this agreement is called structured settlements. Typically, the payments are made though the procurement of one or more annuities. The payout can be received according to what the two parties agreed on, it can be monthly, quarterly or yearly.
There are so many advantages for choosing structured settlement instead of getting the money owed in full or in just one single payment. First of all, its major advantage is savings on tax. Certainly, you can save so much money because the amount receivable or the payment is tax deductible, you can even get the full amount absolutely tax free. One more benefit of structured settlement is that, since the money is paid at regular intervals rather than in one go, you will avoid the chances of spending your money in unimportant things that you will only regret later. Likewise, if the payments will come in small amounts but regularly, you will have lots of time to think about where to wisely spend your money.
However, like with anything else, the structured settlement also has its disadvantages. Firstly, the closing of the settlement case is a very lengthy process. It may take up to 6 months and then you still have to wait for another 2 months before getting the first payout. Secondly, the amount of payout, whether monthly, quarterly, or annually, may not be enough to cover some major purchases like a car or house or even for a business venture. Lastly, the settlement agreement is not flexible. After the terms and conditions had been laid down, they can't be changed. Thus, there's no way to get the full amount if ever the need arise, no one can adjust the arrangement. In this case, the person can just sell his or her structured payment plan to somebody else for a lump sum.
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