You have done your research, talked with your lawyer and are now prepared to structure some or all of your personal injury or medical malpractice settlement.
What happens next?
Here are the basic steps that occur once you decided to invest your settlement in a structured settlement annuity:
- Analyzing Economic Damages First, a good structured settlement company will get involved even before the amount of the settlement money you will receive is finalized. Our firm often works with NFP Structures. During negotiations, your lawyer will worth with the structured settlement company to calculate your economic damages and the long-term cost of your needs based on factors such as your medical care and basic living expenses for you and your family.
- Designing Your Structure Your lawyer and the structured settlement company will work with you (and in some cases your accountant or other advisors) to understand the payments necessary for your current and future needs. Together, we work to design a structure suitable to your financial objectives.
- Working to Secure the Best Rates After your future cash flow needs are determined, the Structured Settlement company provides you structured settlement quotes from highly-rated insurance companies offering the most competitive rates. Together, we may choose one or several companies to fund your future payments according to the schedule that works best for your needs.
- Checking the Legal Details As this is all going on, the structured settlement company will review all documentation for compliance with Internal Revenue Service requirements to make sure your future investment income remains tax-free. After compliance and document accuracy are confirmed, a package annuity contracts and related documents is submitted to everyone involved before finalizing your contract.
- Buying the Annuities In order for the structure to remain tax-free, the defendant(s) or the defense insurance company must pay the annuity provider(s) directly to purchase the contract(s) that will fund your future payments. In order to comply with the Internal Revenue requirements, the injured person is prohibited from receiving the initial settlement money directly. This is called “constructive receipt” and can disqualify you from enjoying the tax benefits of your annuity.
- Submitting Final Documents Once all of the annuity contracts and supporting documents are finalized and signed, the structured settlement company submits the package to the insurance company(ies) to finalize your structured settlement. Next, a policy or contract is issued and all final documents, policies, and contracts are distributed to you and all other required parties. These may include the defendant; the annuity provider(s) and insurance companies; your attorney, accountant, and/or tax advisor; and other appropriate parties.
- Receiving Your Payments Once the annuity contracts and all other required documents are signed and the process is completed, on set date(s) the payments from the insurance company or companies will begin. Typically, the investment money from your structured settlement annuity is directly deposited into your bank account. Meanwhile, your structure also begins earning tax-free interest immediately.
- Enjoying Ongoing Support Though your case may be settled a good lawyer and good structured settlement company will be available to you long after the payments begin to answer all of our questions and make any necessary changes. For a lawyer, it is great feeling to talk with a client years after a case has concluded and learn that the settlement money continues to provide comfort and protection.