Structured Settlement

What is it?

A structured settlement is a single or series of future tax-free payments accepted as part of a settlement in addition to, or instead of, an up-front cash payment.

The future payments can consist of one or more of the following:

  1. A single lump sum payment made in the future. Examples: education, retirement, purchase of a home or future investment;
  2. A series of future payments. Examples: annual payments for college, monthly payments for income replacement or future care costs or payments every five years for reinvestment or major expenditures;
  3. Periodic payments for the life of the annuitant to insure that he/she has income and/or care payments for as long as he/she is living. Payments for life eliminate the major risk of outliving one's resources.

Structured Settlement Requirements:

  1. Purchase of the annuity directly by the defendant/insurer so that the future payments are tax-free to the claimant. In certain instances a court-supervised trust can be used to eliminate the participation of the defendant/insurer in the purchase of the annuity;
  2. A Settlement Agreement & Release signed by the defendant/insurer as well as the claimant;
  3. An assignment agreement assigning the obligation to make the future payments from the defendant/insurer to the assignee, which is an affiliate of the life insurance company issuing the annuity.

Settlement Advisors works closely with claimants and their attorneys in planning for the claimant's future financial needs, determining the best schedule for the future payments, obtaining the best pricing in the life markets, documenting the future payments, assignment and annuity in the release and preparing and submitting the paperwork for the annuity.

Click here for more details on the structure of a settlement that includes future tax-free payments.