Structured settlements a good bet for most injury victims
By AdvocateDaily.com Staff
Structured settlements are often in the best interest of seriously injured accident victims facing years of medical and attendant-care needs, says Toronto personal injury lawyer David Derfel.
The financial products, which divide court-ordered payouts into regular tax-free instalments, have established themselves as a popular alternative to lump-sum settlements since their introduction to Ontario in the late 1970s.
“Structured settlements are vital when you have someone who is going to need that money over a very long time to take care of their future care needs,” says Derfel, founder and principal of Derfel Injury Lawyers. “Instead of giving what can be a large, six- or seven-figure lump sum settlement to someone, they get a certain sum every month for a period of years, which ensures the funds will always be there for rehabilitation, attendance, food and shelter. Every structure is personalized to the needs of the client, including the amount of the payment and the years over which it is paid."
Structured settlements also reduce the risk that an injury victim might squander their award, or having an unscrupulous person taking advantage of their newfound wealth, he tells AdvocateDaily.com.
“A structure is not assignable, so nobody else can get their hands on the money,” Derfel says.
As low-interest rates have prevailed throughout the financial world, Derfel says clients have become more likely to raise concerns about returns, suggesting they might be able to generate more income via another investment.
However, he says that due to the tax-free nature of a structure, the actual return may be better than other investments that are taxed.
“I never offer financial advice to clients and will leave it to the structure provider to explain the benefits,” notes Derfel.
“Payments are completely protected — even in the case of bankruptcy — and I cannot think of any other investments that will be able to match a guaranteed, tax-free, creditor-proof return,” he says.