Guidelines for Defense Professionals

There are certainly cases where there isn’t enough money to fully address future needs through a structure.

Structured settlements come in all different sizes, and your structured settlement consultant will give you the best options to consider for your claim. That means we structure a large number of small cases where there is limited money available in the settlement process.

Sometimes a small portion can be set aside in a structure for a specific purpose, like a future surgery, a small college fund, or replacing money taken out of a 401(k) or pension.

Personal injury victims fall into what we call “unique investors”; people who can’t afford to take any risk with settlement funds that often need to last a lifetime.

That money shouldn’t be chasing interest rates, gambling on uncertain investments, riding out a volatile market, or risking the early depletion of funds needed to cover basic bills.

The key here is the preservation of capital, not the accumulation of wealth.

That’s not a bad thing at all. The key is working with the claimant’s financial planner to ensure they understand the structures, how they work, and the tax code that governs them.

We almost never recommend putting all settlement funds into a single structure or any single investment. Collaboration between the broker and the financial planner is what leads to a sound financial future,

And, as mentioned in #4 above, claimants simply can’t afford to take risks with these funds.

The whole point of a structure is to match future needs with future payments.

Most claimants overestimate how much cash they need right away, and in many cases, taking a large cash payout leads to the funds being spent prematurely; often on things unrelated to the injury itself.

So it’s worth asking what the cash is actually needed for; often, those needs can be annuitized through a structure, or at the very least, it helps clarify exactly how much cash is needed versus how much can go toward structuring their future expenses.

Compared to what? Over the past 200 years, interest rates have stayed below 7% more than 89% of the time.

And since structures are tax-free, they effectively offer a higher rate of return than fully taxable investments, with rates that are guaranteed and not subject to market fluctuations.

As mentioned in #4 above, claimants shouldn’t chase rates with settlement funds, since that often leads to the funds being prematurely depleted when they’re needed for life.

This portion of money needs to be guaranteed, locked in, and matched to their current and future financial needs; not subject to market volatility.