You might have heard of structured settlements, but it’s understandable if you’re not quite sure what they involve. Words like annuities, plaintiff, and defendant can be confusing. So, let’s look at a few hypothetical stories that explain structured settlements more clearly than dry legal language.
Imagine an elderly woman who gets seriously injured in a car accident. She’s driving home from her daughter’s place at dusk when a careless SUV driver crashes into her car. She suffers severe pain, life-threatening injuries, and significant blood loss. Doctors determine that her severe hip injuries will limit her mobility. As a result, the court awards her a structured settlement with a monthly payment of $3,800 for the next 15 years, starting the following month. Additionally, her car insurance company is ordered to pay her a lump sum of $500,000 when she turns 70. This example shows how structured settlements can provide long-term care for victims.
Now, picture a 10-year-old boy named Johny who is attacked by a dog at the park. Johny suffers deep facial wounds and fractures from the fall during the attack. The court decides the dog owner must compensate Johny. The owner arranges for a structured settlement company to purchase an agreement from an insurance company to pay Johny yearly annuities of $25,000 for five years when he turns 18. The owner also agrees to four payments of $100,000 every six months over two years. This case illustrates how structured settlements can be adjusted so that payments are deferred until the beneficiary is no longer a minor.
Finally, think about a 40-year-old factory worker named Mark, who loses his life in a factory accident. A fire breaks out from a furnace near where he was working, and the nearest fire extinguisher is out of order. The court holds the company responsible and orders a structured settlement for his wife. The company is required to pay her $40,000 each month for the next 30 years. She also has the option to request higher payments six months in advance for her medical needs once she turns 50. If the company goes bankrupt during this period, the state ensures that all remaining payments are made through the liquidation process. This example highlights the value of structured settlements as a long-term financial safety net for the families of victims and their ability to adapt to unforeseen future needs.
These three hypothetical cases help explain situations where a court might award structured settlements. Courts often prefer arrangements that assure continuous support for victims or their dependents. These examples also shed light on the potential amounts and durations involved in structured settlements. Importantly, they emphasize the commitment to fulfilling settlement obligations, even if the issuing company goes bankrupt.