In a claim for personal injury, an injured party, known as a plaintiff, claims that they have sustained an injury due to an act or failure to act by a wrongdoer, known as a defendant. If the plaintiff is successful in their claim, a court may award the plaintiff money damages for their personal injury.
Personal injury damages can include a plaintiff’s emotional health, physical health, or both. Examples of mental health injuries include emotional pain and anguish sustained by an accident. Examples of physical injuries include injuries to organs, limbs, or other parts of the anatomy. Injuries can also be long term, or can even manifest at some point in the future.
There are several types of incidents which may form the basis of a personal injury claim, including but not limited to:
Personal injuries may occur intentionally, such as when a defendant deliberately injures a victim, or intends to commit an act that they know will result in injury to another person. However, personal injuries may also occur unintentionally. If a personal injury occurs unintentionally, then the injury would be deemed to be the result of someone’s negligence, and the plaintiff may file a lawsuit based on that negligence.
For example, automobile accidents, slip and fall accidents, and medical malpractice are some of the most common examples of personal injuries caused by another individual’s negligent behavior.
What Are the Types of Damages Awarded in Personal Injury Cases?
Although the plaintiff in a personal injury case must specify the damages they are seeking in their complaint, it is ultimately up to the court to decide what type of damages, if any, that a plaintiff should receive. The most common remedy for a personal injury case is a monetary damages award. These damages are typically paid out by the party who caused the injuries, or their insurance company.
Examples of monetary damages that may be awarded by the court and other legal remedies include:
- Restitution: Restitution is meant to restore an injured party to the position they were before the injury occurred;
- Liquidated Damages: Liquidated damages are a pre-set amount of money meant to reflect an estimate of the actual damages a party should receive, should a specified injury occur. Liquidated damages clauses typically appear in contracts where the subject matter may complicate the process to predict the amount of actual damages; and
- Punitive Damages: Punitive damages are issued when there is an incentive for a court to punish and deter the offending party from re-committing outrageous and offensive actions in the future.
Once again, it will be up to a court and/or jury to determine what type of damages are to be awarded, the total amount of damages to be awarded, and the time in which the damages are to be paid. In cases involving great amounts of damages, structured settlements may be awarded to the prevailing plaintiff in lieu of a lump sum payout.
What Is a Structured Settlement?
In a personal injury claim, the damages award issued to the plaintiff can sometimes be very large. In fact, in wrongful death cases, the monetary damages awarded could be in the millions. In such cases, the court may have concerns in distributing the damage awarded to the prevailing plaintiff in one lump sum payment.
For example, in a wrongful death case where one parent of a family with 4 young children dies, the court may have concerns with awarding the surviving parent the entire damages award as a lump sum payment. In such a case, the court may be concerned with tax consequences, as well as the possibility that the surviving parent may overspend the money. A court may also choose to offer a structured settlement in cases where a plaintiff has long term injuries to ensure that the plaintiff has available cash throughout their lifetime to assist with their injuries.
In cases with a large monetary damage award, the plaintiff is usually given the option to receive monthly payments over time, rather than receiving one lump payment. In such cases, the defendant or the defendant’s insurance provider may utilize an annuity for the damages payments. Then an annuity company would work with the insurance provider to help with payments, known as annuity payments.
The benefit to the annuity company is that the company gains some profit from the payment arrangement. These types of payment arrangements are referred to as structured settlements, and refer to the organized manner in which the payments are being made.
What Is a Structured Settlement Cash Payout?
When referring to structured settlement arrangements, the term “cash payout” can have a few different legal meanings. Many people refer to the option of receiving a lump sum payment as the “cash payout” of the settlement. In these cases, the plaintiff has chosen to take a “cash payout” for the full settlement amount, rather than receive monthly payments. However, legally speaking a “structured settlement” refers to structured annuity payments, rather than the lump sum form of payment.
In legal terms, a structured settlement cash payout refers to a type of payment arrangement where a financial company purchases the plaintiff’s right to receive the remaining payments of a structured settlement. The company that purchases the structured settlement then distributes an immediate lump sum to the plaintiff in exchange for the right to receive the remaining payments of the structured settlement.
Typically, a plaintiff chooses a structured settlement cash payout when they have a need for immediate cash. In many cases, the plaintiff has a choice of either selling their entire structured settlement or selling only a portion of it.
What Are the Benefits and Disadvantages of Structured Settlement Cash Payouts?
Structured settlement cash payouts have many advantages and disadvantages. Benefits of structured settlement cash payouts include:
- Being released from the schedule of annuity payments;
- Obtaining immediate access to all or a greater portion of the total settlement award;
- Making a profit from selling the structured settlement. In rare cases, where the value of the dollar is in severe decline, a person can actually make a profit by selling their settlement to a funding company; and/or
- Avoiding the loss of money due to inflation, annuity commissions, or other factors affecting the total dollar value of the settlement.
Examples of the disadvantages of structured settlement cash payouts include:
- The actual sale of structured settlements is not always allowed by law. Thus, it is important to research the laws of your local jurisdiction, as well as the terms of the structured settlement;
- There are a lot of fraudulent financial companies that take advantage of susceptible persons who have won structured settlement awards.For instance, a fake company may promise a payment for the purchase of a structured settlement cash payment, but then never issue the payment. The company will then use the plaintiff’s personal information for fraudulent purposes; and/or
- The plaintiff will not receive the full amount of the damages award, but rather take a huge cut of the total award in exchange for immediate payment.
Do I Need A Lawyer For Help With Structured Settlement Cash Payouts?
As can be seen, an individual should always be cautious and weigh all the various factors before obtaining a structured settlement cash pay out. In many structured settlement cash payout cases, people wish to cash out their structured settlement as an impulse decision. Thus, lack of guidance can lead to serious losses.
Therefore, if you have any questions regarding a structured settlement cash payout, you should consult with an experienced personal injury attorney. An experienced attorney, coupled with an experienced financial advisor, can advise you of any legal repercussions of taking a structured settlement cash payout. An attorney can also help you evaluate a financial company’s offer for purchase. Additionally, if there is any fraudulent activities, an attorney can also represent you in court, as necessary.
