Structured Settlements

I’m Katelyn Holub, an attorney focusing on personal injury law in northwest Indiana.

Welcome to Personal Injury Primer, where we break down the law into simple terms, provide legal tips, and discuss personal injury law topics.

Today’s question is prompted by a client who, for a variety of reasons, wanted to settle her case under what is referred to as a structured settlement.

If you are not familiar with the term “structured settlement” it will take a few moments to explain.

It is basically the purchase of a long-term annuity contract. The annuity contract will pay out the settlement over a number of years in the future.

If you are wondering why anyone would want to settle a case and have a portion of the settlement be paid out over time we will give you some examples.

One reason why someone might want to do this is to preserve government benefits so they might continue to qualify for government assistance notwithstanding a settlement of their case.

Suppose an injured person is receiving a government-supplemented insurance benefit which has a qualification that insurance beneficiaries cannot have a checking account with more than a specified number of dollars each month. If they have more in their account than the amount of dollars required for eligibility they will be disqualified for the insurance benefit they desperately need.

The solution to this, especially where the injured party might require lifetime care, is to arrange for a settlement where the payout is spread over the lifetime of the client. This enables the client to get a steady stream of money that they can use to supplement their care without having a disqualifying amount in their checking account.

Here is an example. Suppose a client is a nursing home patient who was injured when nursing home personnel dropped them. Suppose they broke a hip. They may be entitled to a large settlement, but unless that large sum settlement is paid out over time, it might disqualify them from nursing home assistance, which they very much need.

In such a case, a settlement can be structured such that the settlement beneficiary receives only a specified amount per month. The settlement party can even assign substitute beneficiaries to receive any unpaid benefits should they die before the annuity is paid out.

There are many more reasons why an injured person may want to structure the way the payout on a settlement is made, but preserving governmental benefits is a big reason and we’ll leave it there for now.

I hope you found this information helpful. If you are a victim of someone’s carelessness, substandard medical care, product defect, work injury, or another personal injury, please call (219) 736-9700 with your questions. You can also learn more about us by visiting our website at DavidHolubLaw.com – while there, make sure you request a copy of our book “Fighting for Truth.”