What is a structured settlement and how does it work?

A structured settlement is a flow of payments issued to a claimant following litigation or court case. The agreement is intended to pay for damages or injuries, providing financial security over time rather than a lump sum of cash. At the same time, companies that purchase structured settlements are known to take advantage of beneficiaries' circumstances to obtain settlements for a relatively small price. There are 47 states with structured settlement protection laws, created by a model enacted by the National Conference of Insurance Legislators (NCOIL).

Instead of paying the cash to you or your lawyer, the defendant will send the money for the structure to a subsidiary of the life insurance company called the cession company. In recognition of the value of providing a stable income stream for injury victims, Congress has made structured settlement profits tax-free. As long as you consider these issues before signing a settlement agreement in your case, you can structure as much or as little as you like and take the rest in cash. We offer competitive rates and set the industry standard for excellent service to injured victims and structured settlement brokers.

The law served as the federal government's acceptance of the IRS ruling and extended restrictions to state governments, prohibiting them from taxing income from the structured settlement of personal injury cases. Structured agreements were first used in Canada as part of the resolution of claims for birth defects arising from pregnant mothers who ingested thalidomide. There are options for structured settlement annualists to sell or transfer rights to future periodic payments to buyers of structured settlement payment rights, mostly known as structured settlement factoring companies. American General insurers are market leaders in providing structured settlement annuities to victims of personal injury, physical injury, or physical illness.

In the United States, structured settlement laws and regulations have been enacted at both the federal and state levels. When you settle a portion of your personal injury claim with a structured settlement, you have funded known expenses such as rent and ongoing medical bills with reliable annuity payments. Even if you already have a structure, you may not know how they work and why they are configured the way they are. Structured agreements are supported by lawyers, legislators, judges and disability advocates because they have seen firsthand what happens to injury victims whose financial security has been eroded due to unforeseen circumstances.

A structured settlement under the terms of the tax code is an agreement that meets the following requirements.

Minnie Wuestenberg
Minnie Wuestenberg

Total pop culture nerd. Hardcore twitter guru. Incurable foodaholic. Hardcore troublemaker. Friendly coffee lover. Unapologetic food junkie.

Leave a Comment

Your email address will not be published. Required fields are marked *