The term structured settlement can be used to describe a settlement that typically occurs during a personal injury lawsuit. This could mean that the settlement occurred without going to trial and the case was mediated out of court by a personal injury attorney. After the settlement is reached,the defendant may not be able to pay the settlement up front or it may not be beneficial for the settlement to be paid out in a lump sum.
When this is the case, it is known as a structured settlement. A structured settlement is an arrangement to pay out a series of smaller payments over a set number of years. This option offers increased flexibility in how large or small the payments will be and in some cases the payments are tax-free.
A structured settlement can also be a way to greatly decrease the amount of taxes the plaintiff has to pay on the settlement. Other reasons why a structured settlement can be beneficial is that it secures a long-term source of income for the plaintiff. This could be the case if the plaintiff sustained injury and requires ongoing medical care.
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