A structured settlement for a personal injury case can be a wonderful way to preserve money especially for children injured in accidents. For example, if a ten-year-old is seriously injured in a motor vehicle collision, the settlement monies are put into a structured settlement and the money is given to the child at a later date, usually payments begin after the minor becomes a legal adult.
By using a structured settlement, parents and the attorney for the child can make sure that the money will last sometimes an entire lifetime. One of the other advantages is that the interest earned on the money is not taxable.
Unfortunately the money will not last a lifetime if the child reaches the age of maturity and then sells the structured settlement to some company for an immediate cash payment.
At least 48 states have tried to make it difficult to sell structured settlements. They require a judge to determine whether or not it is in the seller’s best interest. Consumer groups around the country are pushing to restrict the selling of structured settlements stating that it is not in the individual’s best interest to let go of their money for cash up front.
Speaking as a lawyer who has obtained many structured settlements for clients I can say it is not a good idea to sell those structured settlements for a lump sum of cash. As stated earlier, a structured settlement not only preserves the money for a long period of time but it provides some tax free income to the person receiving the settlement.
