Dissipation Risk with Large Lump Sum Payments
Despite best intentions, lump sum payments are dissipated within a short time after the money is received by the claimant. It is believed that 90 percent of cash settlements are gone within five years. Tragically, when the money is intended to replace lost income for a disability or to care for a seriously injured or ill individual for a lifetime, that person may be left without the means of self-support or to receive appropriate care.
Structured settlements are structured cash payments through an annuity system that is established to compensate injury victims for their losses.
Structured settlements received special legislative treatment by the U.S. Congress in 1982, as a way to make large settlements more agreeable to parties and provide certain protection to victims.
An annuity is a contract or agreement by which one receives fixed payments on an investment for a lifetime or for a specified number of years.
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