What Is a Structured Settlement in a Wrongful Death Claim?

When a loved one dies due to another party’s actions, surviving family members could be entitled to financial compensation in a wrongful death claim. While no amount of money can bring back your loved one, a financial settlement can help with sudden and unexpected expenses. Compensation can be paid out in a lump sum or as a structured settlement. Understandably, clients often ask, What is a structured settlement?  

Structured settlements involve the defendants settling by making payments rather than writing you a check for the entire amount at one time. The installment payments are made at scheduled intervals, such as monthly payments. Structured settlements don’t necessarily work in every scenario, and there are pros and cons. If you lost a loved one due to another party’s negligence, speak with an experienced Colorado wrongful death claim lawyer at Gerash Steiner Blanton, P.C.

How does a Structured Settlement Work?

Structured settlements are agreements where the defendant pays a lawsuit settlement or judgment over set intervals rather than all at once in a lump sum payment. This method is more common with high-value cases, especially those involving a wrongful death claim. The main goal of a structured settlement is to provide long-term financial assistance to the family. These are not necessarily payments the defendants are personally sending each month. Instead, the insurance company for the defendant will typically purchase an annuity with a company according to the terms of the structured settlement agreement.

Colorado has a Structured Settlement Protection Act that governs these types of payment agreements, in addition to the protection provided by federal and contract law. The Act defines a structured settlement as a periodic payment of damage established by a tort settlement. As the plaintiff in a wrongful death claim, you would be the payee. Under The Act, the payee has the right to cancel the transfer agreement within three business days of signing. Transfer agreements cannot violate any laws or court orders. The payee must also be advised of their right to seek independent professional advice regarding the structured settlement offer.

Potential Pros and Cons of a Structured Settlement in a Wrongful Death Claim

As with any financial arrangement, there could be potential pros and cons with a structured settlement arrangement. Everyone’s situation is different, so what may be a potential negative for you could be perceived as a positive element for someone else. Here’s a look at some of the pros and cons of a structured settlement in a wrongful death claim.

Pros are:

• Predictable amount of steady income;
• Ability to plan for your family’s long-term needs;
• Comfort knowing you have income for a pre-determined time in the future;
• Flexibility to cover regular living expenses, such as rent or mortgage; and
• State law guarantees most annuities, including structured ones. 

Many plaintiffs prefer a structured settlement because it provides guaranteed financial stability. This can be especially important if the deceased victim was the family’s primary wage earner. A structured settlement can allow you to pay living expenses and bills while finding other ways to supplement your family’s total income.

Cons are:

• Difficult or impossible to change the terms of a structured settlement once it’s set up;
• Risk of non-payment if not set up with protections in place;
• Lacks provisions to account for economic downturns or inflation;
• Could impact your access to certain other types of financial assistance;
• The rate of return could be less than if you aggressively invested the lump sum; and
• Having to wait for payments each time.

Another major drawback with a structured settlement may be the inability to reduce your debt, depending on your situation. With a lump-sum payment, you could pay off bills immediately. You can still pay down your overall debt with a structured settlement, but it will probably take longer. That means you could be building up interest on outstanding principal balances in the meantime. 

How to Get a Structured Settlement?

The defendant’s insurance company cannot force you into a structured settlement agreement. A jury award cannot tell you that you must take periodic payments. The only way to receive a structured settlement in a wrongful death claim is by reaching an agreement with the defendants. This type of agreement is more complex than your typical jury award. Any judgment you receive in a trial will be a lump-sum payment.

Funding a structured settlement varies, as do the terms. You do not have to put your entire settlement into periodic payments. You can counter their offer with potential terms of your own. For example, you could ask for an initial lump sum payment with recurring payments to follow.

It’s essential to speak with your Colorado wrongful death claim lawyer on your family’s situation to negotiate structured settlements. Our goal is to help you fight for the maximum compensation in your case. We will not recommend a structured settlement agreement that is not financially beneficial to your family’s needs.

You might be wondering why insurance companies agree to structured settlements. The truth is that structured settlements often cost insurers less than making an immediate lump-sum payment. You’ll want to compare all possible offers carefully because it’s not necessarily a level comparison between them.

Your attorney can also help write protections into the agreement. For example, if the settlement is going to a minor, they can structure the agreement to include tuition payments for college. One of the most important provisions to include in a structured settlement agreement is payment continuation if you or a family member passes away. This provision is referred to as the guaranteed period.

Contact a Colorado Wrongful Death Claim Attorney

Negotiating a wrongful death claim settlement is challenging enough without factoring in potential structured settlement agreement terms. It would be best if you did not attempt to resolve your family’s claims without skilled legal representation. Do not let the defendant’s insurance company take advantage of you in an emotionally vulnerable state of mind. You should be grieving for your family member, not distracted by fighting with the at-fault party’s insurance company. Instead, let the experienced legal team at Gerash Steiner Blanton, P.C. assist you.

Our firm has over 100 years of combined experience representing injured victims in Colorado. We understand what a challenging time this is for you and your family. We want to protect your rights and help you hold the responsible parties accountable for their actions. Contact our office today to schedule an initial consultation. Let us be the shoulder to lean on during this tragic time.