In the majority of cases, the plaintiff will receive their damages, which have been awarded by the courts, in the form of a lump sum payment. This lump sum payment is made up of all the different types of damages the plaintiff has been awarded, and is paid out as a total onetime payment.
Every now and again, though, there comes a case in which the courts choose to order a so-called structured settlement instead. This structured settlement is an agreement between the plaintiff and other parties which states that the settlement will be paid out in smaller chunks over a set amount of time. As is the case with most things in life, a structured settlement comes with a set of pros and cons.
Cases in Which A Structured Settlement Is Ordered by The Courts
As determined by the Supreme Court of Canada, structured settlements can only be ordered when legislation permits it, or when all involved parties have agreed upon it. However, in all cases, it will ultimately the court which will have the final say and decide whether a structured settlement is best befitting of the unique situation.
In all cases, the court will only agree to a structured settlement when they find it to be in favor of the plaintiff. Circumstances that could lead to a structured settlement would be cases in which the court has reason to believe that the plaintiff will burn quickly through a lump sum payout, and would those profit more from scheduled, smaller payments.
Pros and Cons of Structured Settlements
Injury lawyers in Oakville know that one of the advantages of structured settlements is the reliability of it. The plaintiff will be able to plan ahead for certain purchases and other financial transactions, since they will know the exact amount of money that will end up in their bank account, as well as the time frame it will arrive in. With mounting bills for medical treatment, loss of wages and other sundry expenses, the financial compensation is a great help to the victim and next of kin.
Furthermore, unlike with a lump sum payout, a structured settlement will be paid periodically and without tax deductions. Lump sum payouts on the other hand require of the plaintiff to pay income tax due to the interest earned from it. Similarly, structured settlements also do not generally require the payment of management fee, unlike lump sum damage settlements. Additionally, a structured settlement will also be protected in cases of divorce, as well as be shielded from creditors. This is because it is awarded through a non-assignable contract.