Post Settlement Issues
Once the size of the award is known you will want some advice on how to protect your money for the future. A structured settlement is only available to Claimants who have received compensation awards. It is not available to the public in general.
What is a structured settlement?
In short, a structured settlement is similar to a pension. You pay part of the award to a life office (eg Standard Life) and purchase an annuity. In return, the Standard Life pays an income, usually on a quarterly basis.
Why is it so special?
You may be surprised to learn that a disabled person's income is taxed and this applies to any income which may be generated from an award of compensation.
Income from a structured settlement is received tax free. Also, the payments can be linked to inflation so they rise each year with inflation. Lastly, the structured settlement payments are guaranteed to last for the Claimant's lifetime, however long that may be.
What are the disadvantages?
Once put in place, the structured settlement cannot be changed and some feel that this gives rise to a lack of flexibility. If the Claimant dies earlier than expected, the life office keeps the balance of the amount paid to them. Lastly, the cost of care usually outstrips RPI and so there is a risk that the income from the structured settlement may not keep pace with carers' earnings. It is important to remember that the level of income from a structured settlement depends upon a Claimant's particular circumstances and so will vary in every case.
There are many different types of structured settlement and one may suit your needs. However, the structured settlement must be implemented before the case concludes. You cannot go back later after the litigation has finished.
The income from a structured settlement depends upon the market annuity rates at the time your quote is obtained. It is also dependent upon the life expectancy of the Claimant and the amount invested. Therefore, the quote needs to be obtained before a decision is made about whether a structured settlement is appropriate for you.
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