The process of resolving a civil case through a structured settlement involves the person who has been aggrieved (the plaintiff), the person or company that caused it. A long-term structured settlement has several advantages:. A structured agreement provides long-term, guaranteed income that gives the injured party or family the ability to recover without spending time and resources determining investment strategies. Structured settlement brokers (a special type of insurance agent) consult when a case approaches liquidation.
The life insurance company that issues the annuity pays standardized fees to brokers. Brokers can execute many financial projections based on a term of years, payments throughout your life, throughout your life in common with your spouse, etc. You can even request that no payments be made for, say, 10 or 15 years, and the payments start thereafter as a way to finance your retirement. 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.
They need to be set up correctly and you can't own the annuity policy or the tax benefits won't work. 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. The assignment company will purchase the annuity from its parent life insurance company, and the assignment company will keep the policy and pay you every month as required by the contract. The defendant or insurer then pays the settlement funds to a third party assignment company, which assumes responsibility and purchases an annuity from a structured settlement insurance company.
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. We (or your payment planner) will provide you with the language you need to add to the agreement documents. If you find that your expenses increase while you wait for your first structured settlement payment or initial lump sum, you may want to consider pre-settlement financing options to help you. You can “collect” your future structured settlement payments by selling them to a factoring company at a discount if you need immediate cash.
The Federal Periodic Payment Settlement Act of 1982 made court approval mandatory for all sales of structured settlements to ensure that the best interest of the consumer comes first and limit any party taking advantage of the receiver of the settlement. It's important to weigh the pros and cons of agreeing to a structured agreement in relation to your unique circumstances. The process of creating a structured settlement annuity is different from when your clients accept a simple cash settlement. We offer competitive rates and set the industry standard for excellent service to injured victims and structured settlement brokers.
The choice is ultimately the plaintiff's, and many find a structured settlement much more beneficial than a lump-sum cash payment. When the defendant and plaintiff agree to settle a lawsuit with a structured agreement, the parties negotiate a cash amount payable by the defendant in exchange for the plaintiff withdrawing the lawsuit. Structured settlement agreements are designed to provide periodic payments for a fixed number of years. Even if you already have a structure, you may not know how they work and why they are configured the way they are.
Settlement payments to the injured party did not count towards their gross income and, therefore, they were not required to pay taxes on the money received. Under federal law, judicial oversight and approval is required for structured settlement beneficiaries who choose to sell payment rights in a structured settlement to a third-party company. .