Structured Settlements

Although it might seem like an intimidating term, structured settlements are actually easy to understand.

Here two ways lawsuits may play out:

• You win a civil lawsuit, and a judge or jury rules that a company or individual must compensate you with a specific amount of money. In this situation, you are likely to get a lump sum payment.
• You agree to a settlement with the individual or company you are claiming against before the case reaches the courtroom.

You would then typically have the following options to receive the money:

•  Receive the total amount as a lump sum.
•  Receive a portion of the total amount as a lump sum, then the remainder as installments over an   agreed period.
•  Receive the total amount as installments over an agreed period. This may or may not include a life  contingent payment phase to the installments. We will discuss what life contingent structured settlement payments are in a later section.

If you receive installment payments over an agreed period, that’s a structured settlement! Depending on the context of a specific case, you might see a structured settlement called a structured settlement payment agreement or referred to as periodic payments.

Whether you will get a lump sum of a structured settlement depends on several factors.

First, the amount of money you are offered  might influence how the you  want to get paid. For example, a you not want a structured settlement if the Defendant is paying you $25,000 but if the Defendant is going to pay you larger sums you may prefer to receive those amounts overtime.

The nature of the lawsuit may also influence whether a structured settlement is suitable. For example, if you bring a claim because you are no longer able to work and earn an income, a structured settlement may be a way to replace steady income.

Either party can offer or request a structured settlement. However, both parties must agree to the terms of the settlement before it becomes legally binding. This is to say that   structured settlements are generally agreed upon between the two parties involved in a lawsuit, rather than directly being awarded by a judge.

Typically, when a structured settlement is agreed upon, the defendant pays the money to purchase an annuity, which is then paid to you via an insurance company.

We’ve already given you an outline of how structured settlements come into existence and why they may be preferable.  Now, we will take a closer look at the process in more detail.

While the sum of money you are to receive may be negotiated by yourself and the defendant, the process of setting up a structured settlement involves other parties.

As a minimum, expect the process of setting up your structured settlement to include:

• Yourself
• The company or individual you have sued
• A qualified assignee
• A life insurance company

Depending on how the negotiation of your structured settlement progresses, the process may also include:

•  lawyers or independent financial advisors
•  An economist

Here’s a look at the complete process, starting from the moment something happened that led you to bring a case against the defendant:

Selling your Structured Settlement

Structured settlements have a considerable range of potential advantages. They are ideal for many people due to the guarantee of a regular income. If you are currently going through a civil case and are waiting to receive an offer from the defendant or be awarded a sum of money by a judge, you must consider both the benefits and the potential drawbacks of structured settlements.

When considering a structured settlement, it is equally as important to consider the potential downsides as well as the potential benefits.

These potential downsides include:

The inability to change your structured settlement‘s terms after agreeing on the details and having it finalized in court. If a change in the economy or your circumstances leads to a change in your financial situation, you may only have the option to sell your structured settlement. 

If you face a financial emergency,you can’t quickly get funds if you have a structured settlement. If you want to sell your structured settlement, a judge will generally sign this off within 45 to 60 days of an application.  It could take over 4 months in some cases depending how quickly the docket moves in the Court where the buyer has to file the petition.   Therefore, it could take significantly longer to get the cash you need.

The court process framework prevents you from selling your structured settlement or taking a lump-sum paid without judicial approval.  Many people did not like having to justify why they need the money to a Judge when they feel they are competent to make their own decisions.

1. Personal injury cases
2. Workers Compensation
3. Medical Malpractice
4. Wrongful Death
5. Workplace Discrimination or Harassment
6. Sexual Abuse
7. Wrongful Imprisonment

Personal injury cases are among the most common type of civil claims that lead to structured settlements.

While not focusing specifically on structured settlements, Martindale-Nolo Research’s 2017 personal injury study highlights how much you can win in a personal injury settlement and the effectiveness of seeking legal counsel when doing so.

Some of the most startling statistics from the study include:

•   71% of all personal injury claims end with a settlement.
•   26% of all personal injury awards exceeded $25,001.
•   91% of claimants received a payout if they had a lawyer, compared with 51% of people who didn’t use a lawyer.
•   The average settlement for claimants with a lawyer is $77,600, a massive $60,000 more than the average payment for claimants who don’t use a lawyer!
•   Claimants who negotiated their settlements were awarded an average of $42,500. Those who accepted the first settlement offer received an average of only $11,800.
•   Claimants who threaten or file a lawsuit win an average of $45,500, compared with $23,000 for claimants who take no steps towards making a claim.

According to Hollington Brown LLP, citing the National Safety Council, an American is injured at work every seven seconds. Admittedly, employers aren’t at fault for all these injuries, but they are in a substantial proportion of cases.

According to LaBovick Law Group, the success rate for workers compensation claims is a little higher than for personal injury claims, standing at 73%.

Workers compensation payouts are typically lower than personal injury payouts, at $21,800, with 68% of claims paying out between $2,000 and $40,000. One of the reasons for lower settlements for workers compensation claims is that it is possible to claim for even minor injuries, such as sprains and strains. At the same time, it is often also possible to receive a payout without proving fault on your employer’s part.

Reading the Expert Institute’s Medical Malpractice Payout Report for 2018, a couple of significant statistics jump out at you:

•   96.5% of all medical malpractice cases are settled out of court.
•   The average payout in medical malpractice settlements is $348,065.

The level of settlement you’re able to negotiate may depend on your location. For example, the average payout in New York state is $446,461, almost $100,000 higher than the national average.

Payouts for medical malpractice also differ depending on the type of claim made, with the following claims consistently the most common:

•   Diagnosis errors (34.1% of all medical malpractice claims)
•   Surgical malpractice (21.4%)
•   Treatment errors (21.1%)

Generally, payouts are linked to the severity of the injury. While most medical malpractice claims are due to a person’s death, such claims only payout an average of $386,317. In contrast, the average payout made to individuals left with a brain injury resulting from medical malpractice is $961,185.

While settlements for premature death resulting from medical malpractice average $386,317, wrongful death settlements, in general, can average around $500,000.

According to Florida-based injury attorneys Jack Bernstein, wrongful death settlements can often exceed $1 million and often be far higher.

Why such colossal fluctuations? More so than any other type of settlement, a payout for wrongful death will be heavily based on the circumstances of the deceased’s family and surviving dependents as much as the circumstances surrounding the death itself.

Claims against wrongful death and the settlement itself will consider factors including:

• Financial support the deceased would have provided to their family.
• Other services and support the deceased would have provided to their family.
• The age and general health of the deceased.
• The needs of surviving dependents, such as funding for college tuition.
• The extent to which a third party is at fault in the case, including considerations as to whether active neglect, or other aggravating factors, are at play.
• Whether exemplary damages are also payable depending on the specifics of the case.

Given the vast range of variables at play in workplace discrimination or sexual harassment cases, there is little reliable data on average payouts. For example, a settlement for sexual harassment may depend on the extent and nature of the harassment. Likewise, a claim against your employer under the Americans with Disabilities Act will generally work differently from a claim under the Age Discrimination in Employment Act.

It’s also vital to consider that, for obvious reasons, many sexual harassment cases within workplaces are settled in-house, with the details never becoming public.

In general, payouts are capped based on the size of the business. This is hugely inequitable; what makes a harassment or discrimination case less valuable just because a company has 90 employees rather than 105?

If you’re considering a claim for workplace discrimination or sexual harassment, you should consult with an attorney. They will assess your case in the context of your state laws if your claim needs to go down such a path.

Cases of sexual abuse are some of the most emotive that we read about, particularly in the case of historical abuse linked to educational and sporting institutions and the church.

The Dordulian Law Group Blog contains a detailed summary of the top 10 settlements for sexual assault, abuse, and harassment in the United States. This summary includes educational and sporting institutions, the church, and media and news industry cases.

As you will see, the settlements differ significantly, from a few hundred thousand dollars per victim to multi-million dollar settlements in serious and high-profile.

Being a victim of wrongful imprisonment can be hugely traumatic. Not only do you potentially lose years of your life if wrongfully imprisoned, but you could also lose your family, friends, and your home. After such an experience, even leaving prison can be hugely stressful, as you find yourself starting your life from scratch. Even if you are eventually cleared of wrongdoing, you may still find it challenging to transition back to a “normal” life. As such, you could experience significant mental health problems and associated issues for years to come.

Settlements for wrongful imprisonment can reach many millions of dollars depending on the circumstances. A structured settlement can help return some normality to individuals who have been wrongfully imprisoned by providing a regular income and potentially a lump sum with which to buy a property and a vehicle.

Regardless of the circumstances that have led to you being awarded a sum of money and now subsequently negotiating a structured settlement, there are several common structured settlement payout options.

If you are ever faced with needing to negotiate a structured settlement – or you’re awarded a sum of money and request a structured settlement – it is worth being aware of your options. Of course, what you can achieve may depend on how flexible the defendant is willing to be and what you’re able to negotiate.

Person A’s structured settlement may look wildly different from person B’s structured settlement.

For example, you will be able to negotiate the following with your specific preferences and circumstances in mind:

The payment schedule – be this monthly, annually, or at another frequency.

• The start date of your structured payments, any immediate payments or lump-sums to be paid during the settlement, or the extent to which you wish to defer some payments
• The end date of your structured payments
• Death benefits to be paid to your spouse or other beneficiaries

Remember, if you are still due payments when you die, these can continue and be paid to someone else. However, you may wish to add specific elements that payout on your death to your structured settlement, too.

The below four options are commonly found within structured settlements. Remember to take financial advice and choose the best option for you. You should ensure you clearly explain the option you wish to explore when negotiating your settlement with the other party.

Do you have a structured settlement or annuity that you are looking to cash in?

We might be able to help you! Call us now on (800) 317-3769 or contact us here to receive a free, no-obligation quote for your settlement or annuity.