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Structured Settlement – Advantages and disadvantages

A structured settlement is a type of settlement entered into by both parties. One party agrees to pay a certain amount that is owed to another. The amount owed was committed to the production of legal settlement or cause. The payment of the agreed sum total is not given in full, but the form of payments. For this reason, this agreement is called structured settlements. Generally, payments are made if the purchase ofone or more annuities. Payment can be received based on what the parties agreed, it can be monthly, quarterly or annually.

There are many advantages to choose a structured settlement instead of getting the money owed in full or in one payment. First, its main advantage is the saving on taxes. Sure, you can save a lot of money because the amount or payment is tax deductible, you can also get the full amountabsolutely tax free. Another advantage of the structured settlement is that since the money is paid at regular intervals and not all at once, you will avoid the possibility of spending your money on unimportant things that you regret later. Similarly, if the payments are small amounts but regularly, you'll have plenty of time to think about where to spend your money wisely.

However, as with anything else, the structured settlement alsohas its drawbacks. First, the closure of the procedure is a lengthy process. It can take up to six months, then you must wait another two months before receiving the first payment. Secondly, the amount of the payment, if paid monthly, quarterly or yearly, may not be sufficient to cover some major purchases like a car or a house or a business. Finally, the settlement agreement is not flexible. After the terms and conditions are fixedthey can not be changed. Therefore, there is no way to get the full amount in case of need, we can adjust the system. In this case, the person may only sell the structured payment plan to someone else for a lump sum payment.

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