The Legal Process of Receiving Settlement Payments
When a person is injured due to the negligence of another party, they often seek compensation through a lawsuit. If the lawsuit is successful, the injured party may receive a settlement, which is an agreed-upon amount of money that the responsible party will pay to compensate for the damages. However, the legal process of receiving settlement payments can be complex and confusing. In this article, we’ll explore the steps involved in receiving settlement payments.
1. Negotiating Settlement Terms
Before a settlement is reached, there is often a negotiation process between the injured party’s attorney and the responsible party’s insurance company. This negotiation may involve the exchange of offers and counteroffers until an agreement is reached on the amount of the settlement.
Once the settlement amount is agreed upon, the terms of the settlement will need to be drafted. These terms will include details on how and when the settlement payments will be made, as well as any conditions that must be met by the injured party.
2. Drafting the Settlement Agreement
Once the terms of the settlement are agreed upon, a settlement agreement will be drafted. This agreement is a legally binding contract that outlines the details of the settlement, including the amount of the settlement, the payment schedule, and any other conditions that must be met.
The settlement agreement will be reviewed by both parties’ attorneys before it is signed. Once it is signed by both parties, it becomes legally binding.
3. Establishing a Structured Settlement
One option for receiving settlement payments is a structured settlement. A structured settlement is an agreement between the injured party and the responsible party in which the injured party receives payments over time, rather than a lump sum.
Structured settlements can be beneficial for injured parties because they provide a steady income stream over a period of time. They also offer tax advantages, as the payments are often tax-free.
4. Establishing a Special Needs Trust
In some cases, injured parties may be eligible for government benefits such as Medicaid or Supplemental Security Income (SSI). However, these benefits have income and asset limits, which can make it difficult for injured parties to receive settlement payments without losing their eligibility.
One solution to this problem is to establish a special needs trust. A special needs trust is a legal arrangement in which the injured party’s settlement payments are placed into a trust, which is managed by a trustee.
The trust allows the injured party to receive settlement payments without affecting their eligibility for government benefits. The trustee can use the funds in the trust to pay for the injured party’s expenses that are not covered by government benefits.
5. Receiving Settlement Payments
Once the settlement agreement is signed, the responsible party will begin making payments according to the agreed-upon schedule. In some cases, the responsible party may transfer the settlement amount to an annuity or other financial product that will provide the ongoing payments.
The injured party should keep track of all settlement payments received and consult their attorney if they encounter any issues with receiving payments. In some cases, the responsible party may miss a payment or fail to meet other conditions of the settlement agreement.
In conclusion, the legal process of receiving settlement payments involves negotiating settlement terms, drafting the settlement agreement, establishing a structured settlement or special needs trust, and receiving the actual payments. It is important for injured parties to understand their options and work with an experienced attorney to ensure that their rights are protected.