What is a structured settlement?

A structured settlement is a type of compensation agreement commonly used in accident law in Arizona. It involves a defendant paying a plaintiff a sum of money over a period of time, usually in regular payments. Structured settlements are often used when a significant injury or loss has occurred, as opposed to small or minor damages. The settlement amount is negotiated between both parties and is agreed upon before any court proceedings are initiated. The advantage of a structured settlement is that it provides a steady stream of income for the plaintiff for an extended period of time. This can be beneficial as the payments can be used to cover medical bills or other expenses associated with the accident. In addition, structured settlements are often tax-free, meaning the claimant does not have to pay taxes on the payment received. This can be a significant benefit when the settlement amount is large and the plaintiff is a high earner. In some cases, if the payments are not structured in such a way that the taxes are eliminated, the plaintiff may be able to negotiate with the defendant to include a provision for tax relief in the settlement amount. Structured settlements are also beneficial to the defendant, as it allows them to pay out the settlement amount in smaller installments over a period of time. This can be beneficial if the defendant is unable to pay a large lump sum, such as in cases involving small businesses and/or individuals.

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