In the last few weeks, I’ve been talking to a few potential clients about structured settlements. Structured settlements, often used in large personal injury cases or for settlement of minors’ claims, are settlements that pay off in annuities over time instead of the client receiving a one-time payment of settlement proceeds. In cases of minors, any settlement proceeds have to be deposited in the registry of the court, where they are invested in a CD until the child turns 18. At that point, the child can petition for all the funds to be released. A structured settlement, which is an alternative to this traditional treatment of minors’ settlements, offers two advantages. First, the rate of return earned by the annuity is usually better than the percent return being offered by a bank. Second, many parents aren’t comfortable with their now 18 year old children having access to large sums of cash, which the kids could blow. To avoid this, a structured settlement pays the money off over time. There are an unlimited number of ways these payments could be structured. For example, payments may be made twice a year for five or six years to coincide with tuition payments.
In large cases, structured settlements may be a good idea as an investment. I am cutting and pasting (with permission) a blog post from the California personal injury lawyers at the Bisnar Chase law firm that talk about some of the advantages of annuities.
After receiving a settlement for your personal injury accident in Los Angeles, you will need to decide what you will do with your money. Leaving your money in a savings or checking account may not be a smart choice. Life can be unpredictable. Investing in an annuity can help you to secure your financial future and allow a flexible investment plan.
What is an Annuity?
An annuity is an investment that you will typically use once you reach retirement. Over time your annuity earns you money, then provides you with a stable income once you stop working.
What Benefits Does An Annuity Provide?
An annuity will provide investors with a number of benefits. One of the major reasons why most injured accidents victims should consider an annuity is because few companies offer pension plans for their employees that will provide you will a fixed income for the rest of your life.
When choosing an annuity your provider will allow you to choose the type of investment option as well as the type of return you would like to receive. Once you start your annuity, you will receive a tax benefit. Money in an annuity is not taxed on the amount until you withdraw money.
When you retire, you want to continue your comfortable lifestyle. Ensure this happens by investing your money now in an annuity. The peace of mind that comes with an annuity is well worth the investment. Knowing that you are financially secure when you retire will help you to be at ease and continue to live a comfortable life.
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