Common Myths and Misconceptions About Structured Settlements.

Structured settlements have been gaining popularity

as a way to provide long-term financial stability for individuals who have received

a settlement after an accident or injury.

However, despite their growing prevalence, there are still many myths

and misconceptions surrounding structured settlements.

In this article, we will debunk some of the most common misconceptions

and shed light on the reality of structured settlements.

The Truth Behind Structured Settlements

Structured settlements are often portrayed as complex financial arrangements

that are difficult to understand.

However, the truth is that structured settlements are quite simple.

At its core, a structured settlement is a financial agreement in which the plaintiff receives compensation

for their injury or accident in the form of periodic payments over time,

rather than a lump sum payment.

Myth #1: Structured Settlements Are Only for Large Settlements

One common misconception about structured settlements is that

they are only suitable for large settlements.

In reality, structured settlements can be used for settlements of any size.

Whether the settlement is large or small,

a structured settlement can provide a reliable source of income over an extended period.

Myth #2: Structured Settlements Offer Limited Flexibility

Another myth surrounding structured settlements is that they offer limited flexibility.

While it’s true that the terms of a structured settlement are generally fixed once they are established,

there are options for flexibility.

For example, some structured settlements allow for lump sum payments

at certain intervals or the option to sell future payments for a lump sum.

Myth #3: Structured Settlements Are Taxed Heavily

There is a misconception that structured settlements are heavily taxed,

leading to a significant reduction in the overall amount received by the plaintiff.

However, structured settlements are typically tax-free.

The payments received through a structured settlement

are considered compensation for the injury

or accident and are therefore not subject to income tax.

Benefits of Structured Settlements

Despite the myths and misconceptions, structured settlements offer several benefits for both plaintiffs

and defendants. One of the primary benefits is the security

and stability provided by guaranteed periodic payments.

This can help ensure that the plaintiff has a reliable source

of income for medical expenses, living expenses, and other needs.

Structured settlements also offer tax advantages, as mentioned earlier.

Because the payments are tax-free, plaintiffs can maximize their overall settlement amount

and avoid the tax implications associated with receiving a lump sum payment.

Additionally, structured settlements can provide peace of mind for both parties involved.

laintiffs can rest assured knowing that they will receive regular payments,

while defendants can benefit from the certainty of knowing the exact cost of the settlement.


In conclusion, structured settlements are a valuable financial tool

that can provide long-term security and stability

for individuals who have been injured or harmed.

Despite the myths and misconceptions surrounding structured settlements,

they offer numerous benefits, including tax advantages, flexibility,

and peace of mind. By debunking these common myths,

we can help ensure that more people understand the true value of structured settlements.


Q1: Can I sell my structured settlement payments if I need a lump sum of cash?

Yes, in many cases, you can sell some or all of your future structured settlement payments

for a lump sum of cash.

However, it’s essential to carefully consider the implications

and consult with a financial advisor before making a decision.

Q2: How long does it take to receive payments from a structured settlement?

The timeline for receiving payments from a structured settlement

can vary depending on the terms of the agreement and the specifics of the case.

In some cases, payments may begin immediately,

while in others, there may be a delay before payments start.

Q3: Are structured settlements only available for personal injury cases?

While structured settlements are commonly associated with personal injury cases,

they can be used for a variety of other legal settlements,

including wrongful death, medical malpractice, and product liability cases.

Q4: Can I change the terms of my structured settlement after it has been established?

In most cases, the terms of a structured settlement are fixed once they have been established.

However, there may be options for flexibility,

such as selling future payments or arranging for lump sum payments at certain intervals.

Q5: Are structured settlements subject to inflation?

Structured settlements typically include provisions to account for inflation over time,

ensuring that the purchasing power of the payments

remains consistent throughout the duration of the agreement.

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