In this two-part article, we are discussing the benefits of hiring a settlement planner. When a personal injury plaintiff is awarded a large settlement, they likely are not qualified to manage the funds they received in the settlement. There are many complex nuances in managing a settlement trust and its best to leave the financial planning to a financial expert with experience devising structured settlements. A settlement planner can help maximize a settlement and help your client reach their fiscal goals.
Settlement Planning Offers Long-Term Protection
With a settlement planner overseeing your client’s assets, the plaintiff will be ensured that they have long-term financial protection. One of the greatest benefits of a structured settlement is that the settlement planner can implement a plan for the recipient that suits their financial needs in the present and in the future. The financial expert is able to accomplish this through structured annuities.
When the defendant owes the plaintiff compensation after a settlement, the defendant purchases an annuity from an assignment company. This company is then obligated to provide funds to the plaintiff. This process of payment is called an annuity. There are many ways a structured annuity can be paid. The following payment methods are the most common in settlement cases.
Lump Sum Payment: As we discussed in the first section, there are many negative examples of plaintiffs that elected to take a lump sum payment and ended up spending that money unwisely; however, there are some benefits. Typically, a lump sum payment is a good option for a cash-strapped person that is delinquent on bills that are accruing interest. Whether it’s a mortgage, credit card debt, or car payments, a lump sum payment can help the plaintiff immediately pay off these overdue bills.
Deferred Lump Sum Payment: Settlement planning can incorporate significant future expenses into the plan. This way the capital will be saved away for when that important date arrives. For example, a plaintiff can allocate that a large portion of their settlement is made available when their children turn 18 for college tuition or when they are entering the retirement years.
Steadily Increased and Decreased Payments: One of the most common payment strategies is to slowly increase the payment over time. These structured annuities are very beneficial to help adjust for inflation by increasing over time. Adversely, a settlement recipient can also allocate their payments to decrease over the years as well. This may be ideal for a younger person that wants to pay off student loans and expects to earn more money in the future.
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Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.