Using Structured Settlements to Help Injured Clients

Episode 9:  Louisville personal injury attorney Aaron Whaley invited Brad Cecil, from Ringler, to discuss how structured settlements can be extremely beneficial for injured victims and their financial situations.  These tools can even increase the value of the settlement through compounding interest.

People can be anxious about receiving a large, lump sum payment.  They may have questions about how best to use it, where to deposit it and most importantly, how to make sure it lasts.  A structured settlement can help to make this much easier to manage.  They can be customized to meet the individual’s unique situation and/or concerns. 

Are there tax considerations involved?

In Kentucky, proceeds from a personal injury settlement are tax free.  A structured settlement is a tax free financial tool, including any interest that may be generated.

Are structured settlements subject to market fluctuations and/or volatility?

The funds in your structured settlement are not exposed to market fluctuations.  They are guaranteed against risk.  Large insurance companies payout on these structures, similar to an annuity. 

Who typically uses a structured settlement?

Structured settlements are often used in cases involving minors.  The structured settlement can earn better rates that a simple bank account.  More importantly, the proceeds don’t all have to be paid out at age 18.  This is an important consideration.  The money could be used for many types of expenses, including college.

Adults can also use a structured settlement to provide ongoing income or to cover for future expenses such as surgeries or specially adapted vehicles.  Brad can advise the client on the best way disperse the funds, based on his/her specific situation.

What does it cost to set up a structured settlement?

Unlike a typical investment, there are no fees to set up a structured settlement for the client.  As previously stated, a structured settlement can also grow tax-free.

Can a structure affect your Medicaid benefits?

Yes, but you can plan around those government benefit thresholds to ensure the individual continues to receive SSI or other income-based benefits.  The client, Brad and Aaron can work together to help plan the proper setup and payout schedule.

Is there a minimum amount required to establish a structure?

While approximately half of the structures Ringler handles are $50,000 or less, most are at least $10,000 or more in value for a minor and around $40,000 for an adult. 

What Happens if the Individual dies before the settlement is paid out?

This depends on how the structure is set up.  Usually the funds for a minor are guaranteed.  The money would go to their estate if they pass away prior to age 18.  At age 18, the person can name a beneficiary. 

If the structure includes lifetime benefits, there’s a designated “period certain.”  This could be a 30- or 40-year period.  If the person dies after 20 years, the remaining years would be paid out.  However, if they pass after the period certain, the payments would cease. 

Brad comments that if you have a lifetime benefit and live to be 100 years old, for example, you’ll continue to be paid beyond the period certain.  This example illustrates another way in which a structured settlement could actual end up paying the individual more than the actual, original legal settlement. 

A structured settlement is not a required way to handle an injury settlement.  However, it’s another option Aaron Whaley is able to provide to help his clients. 

If you’d like more information about structured settlements, Brad Cecil and Ringler have a well-developed website with videos, other examples and pages of information.

Click this link for more information about the Whaley Law Firm.

Important Disclaimers:

The information provided on this podcast is for general informational purposes only.  It should not be construed as legal advice and does not constitute an attorney-client relationship.  You should seek the advice of an attorney for guidance related to your specific situation.  I am only licensed in Kentucky, so the general advice provided may not apply outside of Kentucky.

This podcast maybe freely shared, but may not be the modified or edited in any way.  This is an attorney advertisement.  Co-host Jim Ray is a non-attorney spokesperson.