Structured Settlements – How Does One Determine a Payout Amount With a Structured Settlement Calculator?
A Structured Settlement Calculator is an important tool used by attorneys when they are making a decision about the best course of action to take with a case where a claim has been won but the amount is too large to qualify for a lump sum payment. Before entering into a settlement with the winning party, there are several factors that must be considered.
Entering the value of a structured settlement: In order to calculate how much your payments will be when the settlement is paid out, you need to determine the value of the settlement before entering into a settlement with the winning party. Enter the initial values in the second two rows, then click the appropriate “calculate” link. The result will appear in the third row. The difference in the last month’s payments and the first month’s payment are your “annual income”. The annual income is what the winning party is going to receive at the time of the settlement’s termination.
The lump sum: Now that you know how much your payments will be, it is important to decide how much of this lump sum to transfer to your beneficiaries. You will receive a percentage of the settlement payment, so if your recipient receives less than 50% of the total settlement, the recipient may not receive any of the remaining payments. If your beneficiary receives less than 50% of the total, you will only receive a portion of the payment, and the winner may have an option to end the arrangement after one year.
If you choose to end the agreement, your payment will end at the earliest and any future payout amounts will become due at later dates. This can be a concern for many people, as future payouts can reduce their future financial comfort level. There are no guarantees in life, so a loss of future income is a potential consequence. Your beneficiary will not receive all of the payments, but a significant amount will go to paying off expenses that you and your beneficiary may incur during the remainder of the agreement period.
Once your recipient receives your lump sum, he or she will want to spend the money quickly, so you should make sure to get the payments back to them in a timely fashion. Otherwise, the beneficiary could sell the settlement for cash in order to clear his or her outstanding bills and begin to repay your payments. before the payout ends. If your beneficiary has to close on his or her home, he or she may need to move, which could cause further financial hardships.
The final analysis is to ensure that you get a large enough payout so that you can live comfortably while you are receiving the funds. You may have a lump sum in your pocket, but without the income to support your family or your lifestyle, it may not be enough. Make certain that you plan for retirement and health care while the payouts are in place, because you will not have them for long. Consider a long-term financial plan that includes insurance coverage and/or savings for the future so that your money will be available to fund your dreams.