LYCOS RETRIEVER 
Structured Settlements: Lump Sums
built 605 days ago
Attorneys are increasingly at risk for legal malpractice for not recommending a structured settlement instead of a lump sum settlement. The potential damages in such cases can be huge. That is the lesson to be learned from the recently settled bellwether case in this area, Grillo v Pettiete et al. Because the matter was resolved prior to trial, no precedent-setting court opinion will be published. But the case remains a wake-up call on this important new area of litigation against attorneys.
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[T]he alternative came about -- structured settlements. They offer a different solution for compensation. Instead of a lump sum payout, a structured settlement is set up where payment is made over time to the beneficiary.
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Individuals may benefit from selling structured settlement payments if they need or want access to their cash now rather than later. Receiving payments over time may have been in your best interest at the time of the award, but circumstances probably have changed since then. In addition, the dollar amount awarded in the personal injury case may have been high, but the monthly payments of the settlement may be relatively small. Cashing in all or a portion of the payments for a lump sum may make better financial sense. You may need to access future settlement payments in order to:
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Since Grillo, other cases have been filed against attorneys and other participants in personal injury cases where lump sums were accepted instead of structured settlements. There appears to be a growing consensus that in certain types of injury cases lump sum settlements are simply inappropriate.
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While selling a structured settlement, it is important to ensure that a broker does not have any kind of exclusive arrangement with a buyer as this may lead to a poor deal for a seller. Brokers normally have access to several buyers and can obtain quotes from them on the seller’s behalf. This helps the seller to get the best deal possible for his structured settlement. The brokers can arrange for the sale of a structured settlement in a manner convenient to the seller; one can make a part sale of the settlement or opt for a lump sum in exchange for the entire structured settlement.
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Answer: HR 2884 is newly signed federal legislation that makes provisions for structured settlement recipients who want to receive one lump sum payment instead of the remaining structured payments. The new law is a part of the tax relief and assistance package for the victims of the Sept. 11 terrorist attacks.
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