When a legal case pertaining to property is resolved through a compromise formula, the consultants or the accountants on consulting with an association generate a formula for the purpose called as structural settlement. The parties can go for either one time lump sum payment or an installment plan. Structured settlements are normally offered when two or more annuities are on offer. By annuities, we mean savings based on regular deposits and payments like mortgage and insurance payments. The nature of these payments can be anything from weekly to monthly. The only thing required is that they qualify as guarantee for future payments.
As we have known till now, what a structured settlement is? Now we need to know the procedure of making these types of payments. And the benefits offered by this procedure.
The first important benefit offered is tax avoidance. If you settle your payments properly in a structured manner, you can get leverage on your tax liabilities. It may also allow a tax free condition. Another important benefit is that a structured settlement saves a complainant from future problems. Some people do not have good money management skills. More when it involves the huge amount of money. In case of minors and dependent complainants, structure settlement is allocated for specific costs like educational expenses and insurance. In case of medical condition, the provision can be made for the health expenditures like medical vehicles and medicines.
To get the maximum benefit out of the procedure, one should contact an accountant or a financial planner and choose wisely. The accountant can guide you, whether a lump sum plan is better for you or an installment plan. Or in case like receiving public aid would be better or not. As everything have both pros as well as cons. The structured settlement does have some cons which need to be addressed before selecting it.
When one is in a structured settlement contract, he is unable to take any liability or purchases. There is a desire in everyone to buy a house or a car and other expensive articles. But when you are in a structured settlement agreement, you need to repay it before you buy these items. The complainant is unable to borrow for future payments. In this case, some people consider themselves being trapped.
The other disadvantage which some people feel is the plan leads them to overestimate their investment abilities. Investment with future benefits is considered as a life changing decision by some people. But when people overestimate their investment abilities, they may find themselves in a future worsening situation. If the investment goes right you can double or triple your money. But when it goes wrong, you may end up empty handed. Hence one needs to carry a proper amount of evaluation of their finances before making a decision.
Sometimes when we have a huge amount of money at our disposal, we make exuberant expenses. This squandering is considered as a disadvantage of structured settlement quotes. This again requires a proper financial planning to avoid squandering.
Hence when one thinks about structured settlement quote, one needs to take into consideration the pros and cons and make a decision. This tool is a great power at your disposal. Hence one needs to use it wisely to make their future finances better.