What is a Structured Settlement?
- A structured settlement is a tool created specifically for settling claims and is not available to the general public.
- Although it can be used after a dollar settlement is reached, it is most effective when used before and during settlement negotiations.
- It is an agreement in which the claimant receives future periodic payments over time in exchange for a release of the claim.
- It can help bridge the gap between the dollars demanded and the dollars oferred to settle.
- The larger future periodic payments are funded with an annuity based on the smaller present value or cost. This cost is in the form of a single lump sum of cash at the time of settlement.
- Payments can be tailored to meet the needs of the applicant and his family.
- Payment types include: Lifetime, Guaranteed Periods, Lump Sums, COLAs, other.
- ALL PAYMENTS ARE TAX-FREE (when the claim is the result of a physical injury as defined in Section 104(a)(1) and (2) of the Internal Revenue Code).
We do not offer tax advice. Please consult your tax advisor.
Applicable Internal Revenue Codes
Section 104(a)(1) excludes from gross income those benefits paid to injured workers under a workers' compensation statute.
Section 104(a)(2) excludes from gross income the amount of any damages received (whether by suit or agreement and whether in a lump sum or periodic payments) on account of personal injuries or sickness.
"...any assignment of liability to make periodic payments as damages (whether by suit or agreement) or as compensation unedr any workers' compensation act on account of personal injury or sickness..."
