Personal injury cases stem from accidents that occur due to someone’s negligence or malicious actions. These cases can be settled in two ways: through settlement negotiations or by getting a judge or jury involved – through trial. This article considers the structured settlement approach and how the process works in California.
Therefore, if you have suffered a personal injury in California, here is everything to know about settling with the at-fault party. Meanwhile, consulting a competent and experienced personal injury attorney will make the process go more smoothly.
The Structured Settlement Approach to Resolving Personal Injury Claims
When an individual has suffered a personal injury caused by another individual’s actions or inactions, personal injury claims ensue. However, the case does not go straight to court; other dispute resolution methods are applied first. The first thing is to settle negotiations, which can go in different ways, including structured settlement.
The structured settlement agreement is one held between two parties where, rather than a lump sum upfront, the defendant pays the injured party overtime. Usually, terms and conditions will be set out in detail, showing periodic payments that continue until a particular date or event.
How the Structured Settlement Process Works in California
The structured settlement process follows a particular pattern, starting with drawing up an agreement that both parties will sign. Below is a step-by-step guide on how the structured settlement process in California works:
- Step 1: Reaching an Agreement
The first step is to reach an agreement regarding liability, damages, competent evidence discovery, and other trial preparation matters. After that, one or both parties may propose structure-based solutions, which could involve deferred annuity plans. The alternative to that option is the traditional cash-out option through installment contracts.
Meanwhile, parties may decide not to involve court trials and just resolve the matter privately between them. Or, they may involve a judge and get their approval on relevant documents if they believe the agreement is fair and equitable.
- Step 2: Deciding the Amount
The next step is to decide how much will be paid annually; this determines whether or not to accept the agreement. You could get a financial planner to help calculate this amount, as they are experts in tax concepts. Moreover, they can use their expertise with taxation rules to assist insurance companies and claimants in optimizing payment structures.
Meanwhile, due to the technical issues involved in structured settlement, you may use legal funding services as intermediaries. The process typically requires input from professionals, and that input helps all the parties involved to make informed decisions.
- Step 3: Annuity Contracts, Depositing Funds, and Selecting Beneficiaries
The final step involves the creation of annuity contracts, deposition of funds, and selection of beneficiaries. How these are carried out will depend on the structure the parties involved in these programs agree on.
Meanwhile, parties should review the payment schedule and other agreements regularly to ensure it is accurate. You may even modify the schedule, but not without the prior authorization of a court in California.
Conclusion: Why Structured Settlement is a Great Option
“Structured settlement is a great option for three major reasons: steady income, tax benefits, and reduced risk,” says Attorney Kyle Valero of Valero Law Group Injury Lawyers. First, structured settlement features regular monthly payments, which provide stability and certainty, maintaining financial security, among other things.
Additionally, structured settlements are tax-free under federal law, provided they meet specific criteria in the Internal Revenue Code. Furthermore, there is no risk associated with market fluctuations in the monthly income from structured settlements. In all, if you have suffered debilitating injuries that require long-term treatments, structured settlement makes planning so much easier.
Source:
Valero Law Group Injury Lawyers, California
