What is a Structured Settlement

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What is a Structured Settlement

A structured settlement is a type of annuity that pays out an award from
personal injury cases, lottery winnings, workers' compensation claim or any form of legal settlement in a lump sum with certain tax advantages. Structured settlement owners receive periodic tax-free payments over time in accordance with the terms

History of Structured Settlements

For many years, plaintiffs who won compensatory damages from a defendant received large lump-sum settlements. While the payouts helped recipients pay for medical expenses and other costs related to the legal settlement, many lacked the financial know-how required to skillfully manage large awards.

The Periodic Payment Settlement Act, passed by Congress in 1982, encouraged the use of structured settlements in physical injury cases, and provided legal incentives for their use by amending the federal tax code. It also stated that payments be offered in installments over time, and the entirety of every structured settlement payment would be exempt from federal, state and local income taxes.

ANNUITY STRUCTURED SETTLEMENT 

Why Do People Receive Structured Settlements

Legal settlements from personal injury cases, wrongful death cases and workers' compensation claims are among the most common reasons people receive structured settlements.

Personal Injury

A plaintiff wins a large jury award or settles a claim for a large sum, and the amount is structured into monthly or annual payments over time. Those payments help recipient pay for medical expenses or other costs.