If you are involved in a lawsuit, then you might need to understand more fully what a structured settlement really is for. While not all lawsuits are settled or won, if there are sufficient funds paid to the plaintiff, a structured settlement can protect your money from taxes and other liabilities.

A structured settlement is used to provide tax shelter to monies that are won or awarded from a lawsuit. It used to be that people were awarded lump sums of money and within a short time that money would disappear, either through theft or misappropriation of funds. An annuity is often purchased and the payments received are meant to take care of the person or estate in the legal action.

There are many different ways that you can “structure” your settlement payments, which makes it nice to have that in your control. You can set lump sum payments at various times, change your monthly income at specific intervals or a variety of other things. The structured settlement is also usually tax exempt income and it doesn’t hurt to have a trust fund established also to accept the money.