STRUCTURED SETTLEMENT TRUST
Back to GlossaryDefinition
A trust that is funded with payments to be received over a period of time as the result of a settlement in a personal-injury lawsuit
Summary
A Structured Settlement Trust is a special financial arrangement created when someone wins a personal injury lawsuit but chooses to receive their settlement money over time rather than in one lump sum. Instead of getting all the money at once, the settlement is placed into a trust that makes regular payments to the injured person over months, years, or even their lifetime. This arrangement provides steady income and can offer tax advantages, while protecting the recipient from spending all their compensation too quickly.
Usage Context
Understanding structured settlement trusts is important when studying personal injury law, insurance settlements, estate planning, and financial planning for clients with long-term needs. This concept is particularly relevant in tort law courses and when analyzing alternatives to lump-sum damage awards.
Common Confusions
- Thinking the injured person can change the payment schedule whenever they want
- Confusing it with regular investment accounts that can be accessed freely
- Believing all personal injury settlements must be structured this way
- Assuming the payments always continue for the person's entire lifetime
- Thinking the trust can be used for any type of legal settlement, not just personal injury cases
