Accidents happen, and the workplace is no exception. Whether you're the injured party (the plaintiff) or the business owner (the defendant) in the lawsuit that follows, litigation is costly and stressful. Structured settlements — whereby an injury victim receives a series of tax-free payments via annuities to cover future expenses, rather than an immediate lump sum — are valid for personal injury cases, workers' compensation claims or wrongful deaths, and are designed to lessen the impact of related lawsuits.

Here's how structured settlements can benefit plaintiffs and defendants in injury cases:

1. If you're injured, having a claim paid to you in periodic payments via a structured settlement, rather than in one large lump sum, saves you from paying taxes on your settlement and can help it last a lifetime.
2. If you're named in a workers' compensation claim, a structured settlement can lessen your litigation costs and facilitate the removal of the claim from your corporate books.

Action Steps
The best contacts and resources to help you get it done

Hire a settlement specialist

Specialist firms will advise your attorney on making the settlement or negotiate the payout of your settlement with financial institutions.

I recommend: The Structured Settlement Alliance will match you with a financial institution that is able to handle your specific needs. Structured Settlement Services works with attorneys on structured settlements. Or find other firms in this field through the National Structured Settlement Trade Association (NSSTA).

Sell your settlement, grow your business

If you need immediate cash to buy a business or a franchise or to grow your business, consider selling your structured settlement for a lump-sum buyout. Note that many states, however, forbid the sale of settlements to third-party buyers and the federal government restricts it where tax-free settlements are concerned, so be sure to consult your attorney before accepting an offer.

I recommend: J.G. Wentworth, Settlement Capital Corporation and Annuity Transfers are just a few of the companies available to purchase your structured settlement.

Turn your settlement into a retirement fund

Invest your periodic payments in a tax-free retirement account for the self-employed. This will allow you to take advantage of 'dollar cost averaging,' whereby you invest the same amount of money each month or quarter in order to lower per-share costs over time.

I recommend: Invest your funds in a Roth IRA, SEP or Keogh to keep your money tax-free as it grows. Fidelity, TD Ameritrade and E*TRADE each offer a variety of retirement savings accounts.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  In addition to injury settlements, taxable recoveries and attorney fees also may be received as structured settlements.
• •  Avoid settlements that cease payment upon your death; instead, insist on an annuity that provides a minimum number of payments or that will continue making payments to your estate in the event of your passing.
• •  Consider negotiating your structured settlement through multiple insurance companies; dividing your settlement among several providers protects you in the event that one of them files for bankruptcy.