Structured settlements have many benefits to it. With a structured settlement, tax is avoided. Because of an appropriate and educated setup, a structured settlement is also able to reduce the plaintiff's tax obligations and may sometimes be tax-free.
A structured settlement can be a good way to preserve the plaintiff's settlement funds, preparing him for necessary future payments. Most of the time, a structured settlement serves as a protection from the plaintiff himself and limits his money use. A lot of people are simply not good with money, or could not just say "no" to relatives and friends who want to "taste" their wealth. For these types of people, a large settlement can immediately go to waste and disappear.
Structured settlements are also advantageous for minors as well for they can be used to provide payments through their lifetime--personal costs during their adolescence, additional disbursements for college and other academic expenses, and other disbursements during adulthood.
A person who is injured and needs long-term special treatments and services benefits from this as well. Having periodic lump sums will give him the financial capability to purchase medicines, medical equipments, or modified vehicles that he may need.
The downside
Some people feel limited by the periodic payments in a structured settlement. They may want to buy a new car, get a housing loan, or pay for other expensive items and services but this will be impossible with the structured settlements because they are not allowed to borrow against payments for the future under their agreement. So for some people, accepting a lump sum settlement is the better option. They will be the ones to invest it and plan for their future. For them, other standard investments seem to give a better long-term return than the annual payments there is in structured settlements.
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