Did you know 40 million lawsuits are filed in the United States each year? Lawsuits are time-consuming and taxing on all the parties involved.
It’s important for those involved in the suit to stay informed. If you’re in the process of filing a lawsuit or obtaining a settlement, you might be wondering how a structured settlement works.
In this article, we will share more the steps in a structured settlement process. Read on to get started.
The Law Suit Process Gets Started
Before the structured settlement process can begin, the plaintiff has to file a lawsuit against the defendant. The plaintiff might wish to get compensation for an injury, illness, or even death.
If the defendant agrees to the terms of the lawsuit, they can choose to pay the plaintiff via a structured settlement. Agreeing to a structured settlement will keep the case from going to court.
However, even in some situations, the case will go to court. If the case goes to court, the judge might still rule in favor of the plaintiff and set up a structured settlement.
Both Parties Work With an Assignee
Once both parties agree or the judge has issued a settlement, they must work with an assignee to honor the terms of the settlement. The assignee will determine terms such as the number of terms of the payments, payment amounts, and how long they should continue for.
The assignee can also help the defendant in case the plaintiff wants to increase the payment amount down the line.
The Assignee Obtains an Annuity from a Life Insurance Company
After the defendant and the assignee have established the terms of the payments, the next step is to purchase an annuity. A life insurance company will provide the annuity for the assignee and the defendant.
It’s important the defendant works with an experienced assignee. Once the terms of the annuity are final, there’s nothing the defendant can do to change them.
The defendant will also have to set money aside to pay for attorney fees or to put into a trust. Those who want more information about structured settlements can find more information here.
The Insurance Company Makes Payments to the Plaintiff
Once the defendant has obtained the annuity from the life insurance company, it’s time for the plaintiff to get their payment. The life insurance company will most likely pay the plaintiff in a series of payments.
The annuity purchased by the defendant will earn interest over time to protect the value from inflation. It’s an important step designed to protect both parties, and the plaintiff can continue to receive payment without any issues.
If the plaintiff chooses to get a payment ahead of schedule, they will have to sell the rights to future payments.
This is How a Structured Settlement Works
Now that you know how a structured settlement works, you’re ready to continue with your lawsuit.
If you enjoyed these tips and would like to learn more, check out the rest of our blog.